Advanced Surgical Design & Manufacture Limited · of Advanced Surgical Design & Manufacture Limited...

Advanced Surgical Design & Manufacture Limited

Annual Report - 30 June 2013

ABN 71 066 281 132

Donna.Lethbridge

Stamp

201 Sussex Street

12 Frederick StreetSt Leonards NSW 2065

Directors

Company secretary

Notice of annual general meeting

www.asdm.com.au

PO Box 327

Advanced Surgical Design & Manufacture Limited shares are listed on the Australian Securities Exchange (ASX code: AMT)

Website

Stock exchange listing

Bankers

St Leonards NSW 2065

Shareholders enquiries: 1300 554 474

680 George StreetLevel 12Link Market Services Limited

12 Frederick Street

Silverwater NSW 2128

Commonwealth Bank of Australia

Sydney NSW 2000

PwCAuditorDarling Park Tower 2

Sydney NSW 2000

Unit 2

datetime

St Leonards NSW 2065

Principal place of business

Registered office

Share register

Head office telephone: 02 9439 4448


30 June 2013Corporate directory

Richard Ulrick BA, LLB, Dip Fin Mgt, FCIS, CPA

The annual general meeting of Advanced Surgical Design & Manufacture Limited:

will be held at Unit 212 Frederick Street

Unit 2

10:30 AMWednesday 30 October 2013

Peter Kazacos B.E, B.ScJohn O'MearaPeter Welsh

1

2013 2012$'000 $'000

788 1,431 (1,013) (941)

(270) (284)7 10

(488) 216 - (425)

(83) 36

(571) (173)

EBITDA is a financial measure which is not prescribed by Australian Accounting Standards (‘AAS’) and represents theprofit under AAS adjusted for non-specific non-cash and significant items.

Dividends

Profit/(loss) after income tax expense from discontinued operations

Loss after income tax

There were no dividends paid, recommended or declared during the current or previous financial year.

Net profit from ordinary activitiesThe consolidated entity’s earnings before interest, tax and depreciation and amortisation (“EBITDA”) in FY13 was aprofit of $0.7m compared to profit of $1m in FY12.

Review of operationsThe loss for the consolidated entity after providing for income tax amounted to $571,000 (30 June 2012: $173,000).

EBITDALess: Depreciation and amortisationLess: Finance costAdd: Interest income


Principal activities

Peter Welsh

The following persons were directors of Advanced Surgical Design & Manufacture Limited during the whole of thefinancial year and up to the date of this report, unless otherwise stated:

Directors' report30 June 2013

The following table summarises key reconciling items between statutory profit after tax attributable to the shareholdersof Advanced Surgical Design & Manufacture Limited and EBITDA.

RevenueTotal revenue for the year ended 30 June 2013 (“FY13”) was $7.1m, representing a decrease of 11% from the 2012financial year (“FY12”).

This was an encouraging result considering two major core product customers retired during the period. Theexecution of our portfolio strategy of products allowed us to minimise the overall impact and maintain a solid base forfuture growth. We continue to see growth in our recently acquired product lines which balance out the portfolio.

During the financial year, the Active Total Knee Replacement reached a significant milestone; 20 years clinical history.This is a significant achievement for Australia’s only fully integrated “end to end” orthopaedic manufacturer.

Peter Kazacos - Chairman

The directors present their report, together with the financial statements, on the consolidated entity (referred tohereafter as the 'consolidated entity') consisting of Advanced Surgical Design & Manufacture Limited (referred tohereafter as the 'company' or 'parent entity') and the entities it controlled for the year ended 30 June 2013.

Directors

John O’Meara

During the financial year the principal continuing activities of the consolidated entity consisted of the sale, manufactureand design of surgical implants. This remained unchanged from the previous year.

Profit/(loss) before income tax expense from discontinued operationsIncome tax expense

2

Advanced Surgical Design & Manufacture LimitedDirectors' report30 June 2013

Research & Development ('R & D') continues to be ASDM’s competitive advantage and focus. Our local capability indesign and manufacture provides for a responsive and dynamic organisation. During FY13, we continued thealignment of our R&D to support our orthopaedic products and customers with our expenses decreasing by $0.1m to$1.2m (30 June 2012: $1.3m). The two components which support our research and development expenses continueto be Orthopaedics and Vascular. During the year the majority of work focused around the orthopaedic productcategory as the Vascular project, Peripheral Access Device (“PAD”), continues under the clinical trial monitoringprogram.

Net loss after tax was $0.6m (30 June 2012: $0.1m). This result is after the expensing of all research anddevelopment related expenses.

Cash positionThe cash balance at 30 June 2013 was $0.3m, with operating cash flow performance improving. During the period theconsolidated entity secured a debtors financing facility from Scottish Pacific which will enable growth and security incoming periods. As a consequence the overdraft previously in place has been removed as the terms of the facility ofthe debtors finance arrangement are far superior.

During FY13, the consolidated entity completed a staged capital raising program which involved a placement tosophisticated investors followed by a Right Issue raising approximately $0.8m after costs. This additional capitalstrengthens the balance sheet and enables the company to continue to enhance its product and instrumentationofferings.

Sales revenue in our recently acquired categories continues to show positive signs complementing our core in-housemanufactured products.

During FY13, the company continued its focus on streamlining its manufacturing processes by consolidating itsoperations at its St Leonards facility and extending the lease for a further 3 years. The cost and efficiency savings willbe enhanced over the coming years into a stronger margin with future improvements.

Corporate and administration expenses have been reduced over FY13 with further initiatives under review to extractadditional gains in efficiency and outcomes.

Significant changes in the state of affairsThere were no significant changes in the state of affairs of the consolidated entity during the financial year.

Notwithstanding the challenges faced during the year ASDM continued to reduce its debt, with the overall debtbalance at $1.9m down from $2.6m in FY12.

OutlookFY13 continued the consolidation process for ASDM and improvements on a number of fronts. FY13 has placed us ina stable position from which we can grow, with our objective to deliver continued revenue growth and profit in 2014.

In the year ahead we will continue to drive both the commercial and development aspects of our business to ensurewe remain focused on the goal of building shareholder wealth while leveraging our capabilities as Australia’s only fullyintegrated “end to end” orthopaedic manufacturer.

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Other current directorships:Former directorships (in the last 3 years):

Non-Executive Director and Chairman

None

Title:

Peter has over 38 years' experience in the IT industry. He founded KAZ in 1988,guided it from a small IT services company in NSW to one of Asia Pacific’s leading IT services and business process outsourcing service providers with over 4,000employees, as a fully owned subsidiary of Telstra. He also founded Anittel Ltd,building it into one of Australia’s leading IT&C service providers operating outside themajor metropolitan areas, leading to its acquisition in 2010 by Anittel Group Limited,representing a major strategic milestone in the transformation and convergence ofthe IT&T industry. Prior to founding KAZ and Anittel, Peter held a number of seniortechnical positions in the Australian IT industry with leading Australian organisations.Peter was the recipient of the inaugural Australian Entrepreneur of the Year 2001award in the Technology, Communications, E-Commerce and Biotechnologycategory.

Executive Chairman of Anittel Group Limited (ASX: AYG)

Special responsibilities:

Information on likely developments in the operations of the consolidated entity and the expected results of operationshave not been included in this report because the directors believe it would be likely to result in unreasonableprejudice to the consolidated entity.

Qualifications:Experience and expertise:

106,000 options over ordinary shares

Chairman of the Nomination and Remuneration Committee and Member of the Auditand Risk Committee 715,810 ordinary sharesInterests in shares:

Interests in options:

B.E, B.Sc.

An Asset Sale Agreement was entered into with Orthofix Inc on 12 July 2013, the result of which was that theconsolidated entity's existing spinal distribution business was acquired by Orthofix Inc's subsidiary Orthofix AustraliaPty Ltd (‘OA’). This transaction continues the consolidated entity's focus of strengthening the statement of financialposition and on its orthopaedic product range in delivering sales growth and profitability.

As part of the agreement, the Orthofix stock was sold to OA for approximately $2,556,000 and the consolidated entitywas able to fully settle its payable with Orthofix Inc for the amount of $2,546,000. This transaction will result in a gainof $203,000 in the financial year ending 30 June 2014.

Matters subsequent to the end of the financial year

The consolidated entity is not subject to any significant environmental regulation under Australian Commonwealth orState law.

Peter Kazacos Name:

Environmental regulation

Information on directors

Likely developments and expected results of operations

No other matter or circumstance has arisen since 30 June 2013 that has significantly affected, or may significantlyaffect the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs infuture financial years.

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Company secretary

'Former directorships (in the last 3 years)' quoted above are directorships held in the last 3 years for listed entities onlyand excludes directorships in all other types of entities, unless otherwise stated.

Special responsibilities: Member of the Nomination and Remuneration Committee and Member of the Auditand Risk Committee

Special responsibilities:

Non-Executive Director Title:

300,000 ordinary shares

Executive Director and Managing Director

None

None

None

Experience and expertise:

Other current directorships:

Peter Welsh

Other current directorships:Former directorships (in the last 3 years):

Peter has 44 years' experience in the medical device and health care industry. Thelast 29 years directly involved with orthopaedics. He was the first NSW distributor forRichards Medical Company, now part of the Smith and Nephew, selling orthopaedicimplants and arthroscopy products. He also set up Knee Developments Australia ('KDA' ). This company was the manufacturer and worldwide distributor for anteriorcruciate ligament ( 'ACL' ) products. KDA became the market leader in ACL implantsand instruments with sales in many countries around the world. It was sold toDyonics, a subsidiary of Smith and Nephew.

Experience and expertise:

Name: John O’Meara

Interests in shares:

Title:

7,123,132 ordinary sharesNone

'Other current directorships' quoted above are current directorships for listed entities only and excludes directorshipsin all other types of entities, unless otherwise stated.

Richard Ulrick (BA, LLB, Dip Fin Mgt, FCIS, CPA) is engaged by way of a services agreement between the companyand Company Secretarial & Legal Services Pty Ltd which he established. Richard is a Solicitor of the Supreme Courtof NSW and has more than 28 years’ experience in company secretarial and general counsel roles.

NoneInterests in shares:Interests in options:

Name:

John is an energetic business leader with over 28 years senior managementexperience in telecommunications and information technology industries in Australia,Asia Pacific and the United Kingdom. He is a seasoned strategy and projectmanager with expertise in strategic planning and the execution of large scale,complex and deadline dependent projects. He has held a series of senior leadershiproles in Optus Pty Limited and was the Program Director responsible for GSTcompliance when first introduced in Australia. John was the champion of sustainablequality- of-service working practices when he was with British Telecom in Asia Pacificand he was responsible for gaining ISO9001 Total Quality Managementaccreditation. He also held senior management roles in Australia with AAPT Limitedand Dalgety Farmers Limited. In the United Kingdom he held technical managementroles with National Westminster Bank and the British Broadcasting Corporation(BBC).

Member of the Nomination and Remuneration Committee and Chairman of the Auditand Risk Committee

NoneFormer directorships (in the last 3 years):

Interests in options:

5


Attended Held Attended Held Attended Held11 11 3 3 4 4 10 11 3 3 4 4 11 11 3 3 4 4

ABCDE

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Additional information

The remuneration structures take into account:Key criteria for good reward governance practices, namely: competitiveness and reasonableness, alignmentto shareholders’ interests, alignment of executive remuneration with performance, transparency and capitalmanagement;

Service agreements

As a medical device sales, manufacturing, design and distribution company competing against global multi-nationals,the company and consolidated entity requires a board and senior management team that have both the technicalcapability and relevant experience to execute the company's and consolidated entity's business plan.

The remuneration structures explained below are designed to attract suitably qualified candidates, retain keyemployees, reward the achievement of strategic objectives, and achieve the broader outcome of creation of value forshareholders.

The consolidated entity’s executive remuneration framework was developed initially as part of the process of theconsolidated entity becoming a listed company on the ASX in December 2007 and may be fully developed aseconomic conditions and the financial performance of the consolidated entity permits. The objective is to ensurereward for performance is competitive and appropriate for the results delivered.

Meetings of directors

Audit and Risk CommitteeNomination and

Remuneration Committee

The number of meetings of the company's Board of Directors ('the Board') and of each board committee held duringthe year ended 30 June 2013, and the number of meetings attended by each director were:

Held: represents the number of meetings held during the time the director held office or was a member of the relevantcommittee.

The remuneration report, which has been audited, outlines the director and executive remuneration arrangements forthe consolidated entity and the company, in accordance with the requirements of the Corporations Act 2001 and itsRegulations.

Remuneration report (audited)

Peter Kazacos John O’Meara

Full Board

Share-based compensation

Details of remuneration

The remuneration report is set out under the following main headings:Principles used to determine the nature and amount of remuneration

The capability and experience of the executives;

A Principles used to determine the nature and amount of remuneration

Peter Welsh

The ability of executives to control performance; andThe consolidated entity’s earnings and company share price performance.

6


The aggregate remuneration that may be paid to non-executive directors is a maximum of $500,000 per annum. Thisremuneration may be divided among the non-executive directors in such a manner as the Board may determine. Themaximum may not be increased without prior approval from shareholders at a general meeting. Directors will seekapproval from time to time as deemed appropriate.

Non-executive directors remuneration

Non-executive directors generally do not receive share options. However an allocation was made as part of theprocess to listing on the ASX of the company’s shares.

Fees and payments to non-executive directors are intended to reflect the demands which are made on, and theresponsibilities of, the directors.

Payments to non-executive directors are reviewed annually by the Board. The base remuneration has not changedsince 1 July 2008. The Board has regard to information from external remuneration sources to ensure non-executivedirectors’ fees and payments are appropriate within the fiscal constraints of a growing company and in line with themarket. The chairman’s fees are determined independently to the fees of non-executive directors based oncomparative roles in the external market. The chairman is not present at any discussions relating to determination ofhis own remuneration.

The consolidated entity aims to reward executives with a level and mix of remuneration based on their position andresponsibility, which is both fixed and variable.

The executive remuneration and reward framework has three components:● base pay and non-monetary benefits● short-term performance incentives● other remuneration such as superannuation and long service leave The combination of these comprises the executive's total remuneration.

Executive remuneration

Fixed remunerationFixed remuneration consists of base remuneration (which is calculated on a total cost basis including employercontributions to superannuation funds). This base remuneration is structured to be reasonable and fair relative to thescale of the consolidated entity’s business. It assumes the fulfilment of core performance requirements andexpectations.

Notwithstanding these general guidelines directors agreed to dispense with the payment of fees to them for a 12month period from 1 April 2012. Payments recommenced on 1 April 2013.

As non-executive directors assess individual and the consolidated entity performance, their remuneration does nothave a variable performance related component.

Remuneration CommitteeThe Nomination and Remuneration Committee is responsible for ensuring that there is gender parity in theremuneration levels of employees and believes this to be the case.

The remuneration structures are intended to motivate employees for quality short and long term performance. Themix between short term and long term variable components is to maintain a focus on the sustainable short termperformance of the consolidated entity, whilst ensuring its positioning for its longer term success.

Remuneration StructureIn accordance with best practice corporate governance, the structure of non-executive directors and executiveremunerations are separate.

7


Accordingly, where shares are issued, they are generally conditional upon the individual achieving certainperformance hurdles.

Long-term incentives ('LTI')The long-term incentive is intended to be provided to key management personnel other than non-executive directorsas ordinary shares of the company. The directors had considered share options a key tool in attracting the requiredtalented individuals to the management team while staying within the fiscal constraints of a growing company.

Short-term incentive ('STI')At this stage in the consolidated entity’s development, shareholder wealth is enhanced by the achievement ofobjectives in the development of the consolidated entity’s products, within a framework of prudent financialmanagement and consistent with the consolidated entity’s annual business plan.

50% of each executive’s STI is allocated to overall consolidated entity's objectives, with 50% allocated to personalobjectives aligned to the overall objectives of the consolidated entity. The overall consolidated entity's objectives areconsidered on a financial year basis and are based on the consolidated entity’s annual business plan. Theseobjectives are set by the Board. They are generally a mix of commercial and project milestones critical to thedevelopment of the consolidated entity. Each objective has a specific allocation within the overall objectives, so thatthere is transparency in determining the level of achievement of the STI.

The ability to retain the shares will generally be conditional on the individual achieving certain performance hurdles,such as service conditions and the achievement of key performance indicators. However, shares may be granted onwhatever terms are required and appropriate to secure the services of key management personnel. The Nominationand Remuneration Committee is required to approve the number of shares that ultimately vest. The performancebenchmarks are intended to measure relative performance and provide rewards for materially improved consolidatedentity performance. The terms and conditions attaching to the shares are structured with a view to minimising any‘short-termism’ approach on the part of executives.

The Nomination and Remuneration Committee determines whether objectives have been met. The STI bonuspayments may be adjusted up or down in line with under or over achievement against the target performance levels.This is at the discretion of the Committee.

Each executive has a target STI opportunity depending on the accountabilities of the role and impact on theconsolidated entity’s performance. The maximum target bonus opportunity approximates 20% of total remuneration.

The objectives require performance in managing operating costs and achieving specific targets in relation to EBITDAand shareholder value added, as well as key, strategic non-financial measures linked to drivers of performance infuture reporting periods.

Performance linked remuneration is designed to reward key management personnel for meeting or exceeding theirfinancial and personal objectives. Refer to section E of the remuneration report for details of the earnings and totalshareholders return, from 1 July 2009.

If the consolidated entity exceeds a pre-determined Earnings Before Interest, Tax, Depreciation and Amortisation('EBITDA') target set by the Nomination and Remuneration Committee, a short-term incentive ( 'STI' ) pool also set bythe Nomination and Remuneration Committee is available to senior executives during the annual review. This targetensures variable reward is only available when value has been created for shareholders and when earnings areconsistent with the business plan.

Remuneration levels are reviewed annually by the Nomination and Remuneration Committee through a process thatconsiders individual and overall performance of the consolidated entity. In addition, regard is had to information frompublically available external remuneration sources to ensure senior executives’ remuneration is competitive in themarket place having regard to the size of the consolidated entity and the fiscal constraints of a growing company.Remuneration levels for the financial year ended 30 June 2013 were set having regard to the global financial crisisand its aftermath.

Consolidated entity performance and link to remuneration

8


●

●

Post-employment Long-term Share-based

benefits benefits payments

Cash salary Non- Super- Long service Equity-and fees Bonus monetary annuation leave settled Total

$ $ $ $ $ $ $

15,630 - - - - - 15,630 5,000 - - - - - 5,000

5,000 - - - - - 5,000

58,050 - - - - - 58,050 202,609 - - 18,235 9,801 10,000 240,645 286,289 - - 18,235 9,801 10,000 324,325

*

Voting and comments made at the company's 2012 Annual General Meeting ('AGM')At the last AGM 97% of the shareholders voted to adopt the remuneration report for the year ended 30 June 2012.The company did not receive any specific feedback at the AGM regarding its remuneration practices.

The key management personnel of the consolidated entity consisted of the directors of Advanced Surgical Design &Manufacture Limited and the following persons:

Peter Kazacos (Chairman)*

Tom Milicevic - Chief Executive Officer and Chief Financial Officer

John O’Meara *

Use of remuneration consultantsDuring the financial year ended 30 June 2013, the company and consolidated entity did not engage the use ofremuneration consultants.

Amounts of remuneration

Executive Directors:Peter Welsh *

The directors opted to resume receiving their entitlement of fees from 1 April 2013.

Richard Ulrick - Company Secretary

2013

Tom Milicevic

Other Key Management Personnel:

B Details of remuneration

Short-term benefits

Name

The consolidated entity’s Securities Dealing Policy prohibits transactions in associated products which limit the risk ofparticipating in unvested entitlements under any equity based remuneration schemes.

Non-Executive Directors:

Details of the remuneration of the directors, other key management personnel (defined as those who have theauthority and responsibility for planning, directing and controlling the major activities of the consolidated entity) andspecified executives of Advanced Surgical Design & Manufacture Limited are set out in the following tables.

Richard Ulrick

9


Post-employment Long-term Share-based

benefits benefits payments

Cash salary Non- Super- Long service Equity-and fees Bonus monetary annuation leave settled Total

$ $ $ $ $ $ $

46,890 - - - - - 46,890 15,000 - - - - - 15,000

207,838 - - 15,847 48,748 - 272,433

44,100 - - - - - 44,100 194,482 - - 17,556 4,448 - 216,486 508,310 - - 33,403 53,196 - 594,909

*

2013 2012 2013 2012 2013 2012

100% 100% - % - % - % - %100% 100% - % - % - % - %

100% - % - % - % - % - %- % 100% - % - % - % - %

100% 100% - % - % - % - %96% 100% - % - % 4% - %

Richard Ulrick

Dr Gregory James Roger (1)

(1) Key management personnel until resignation on 26 March 2012.

Name

2012

At risk - LTI

Short-term benefits

Peter Welsh was appointed on 22 November 2011 as a director however he has received no fees during the financialyear ended 30 June 2012.



Executive Directors:

Peter Kazacos

At risk - STI

Richard Ulrick


Tom Milicevic

Dr Gregory James Roger

Fixed remuneration

John O’Meara

The proportion of remuneration linked to performance and the fixed proportion are as follows:

Tom Milicevic

The directors opted to cease receiving their full entitlement of fees from 1 April 2012, for a period of 12 months.

Peter Kazacos (Chairman) *

Peter Welsh


John O’Meara *


Name

10


2013 2012 2013 2012

- % - % 100% 100%

- % - % 100% 100%

No of shares Issue price $

300,000 $0.10 10 Tom Milicevic 19 October 2012

Name

Issue of shares

Date

There were no options over ordinary shares granted to or vested by directors and other key management personnelas part of compensation during the year ended 30 June 2013.

Name

C Service agreements


Cash bonus forfeited


Chief Executive Officer and Chief Financial OfficerTitle:Details: Currently on CFO contract. Contract of employment as CEO is being finalised by the

Board.

Remuneration and other terms of employment for key management personnel are formalised in service agreements.Details of these agreements are as follows: Name:

The proportion of the cash bonus paid and forfeited is as follows:

On appointment to the Board, all non-executive directors enter into a service agreement with the company in the formof a letter of appointment. The letter summarises the Board policies and terms, including remuneration, relevant to theoffice of director.

Tom Milicevic

Cash bonus paid/payable

Key management personnel have no entitlement to termination payments in the event of removal for misconduct.

Tom Milicevic

Dr Gregory James Roger

There were no options over ordinary shares issued to directors and other key management personnel as part ofcompensation that were outstanding as at 30 June 2013.

The issued of shares to the CEO are under the following conditions; 1. Subject to a trading lock which remains in place until earlier of 30 June 2015 and the date the Board in its absolutediscretion determines where a takeover bid causes or is likely to cause a change of control of the company and, 2. Are cancelled in the event that you cease to be an employee on or before 30 June 2015.

Options

Details of shares issued to directors and other key management personnel as part of compensation during the yearended 30 June 2013 are set out below:

D Share-based compensation

11


2009 2010 2011 2012 2013$'000 $'000 $'000 $'000 $'000

6,409 7,470 7,370 8,112 7,175 (700) 1,236 (1,743) 1,431 788

2009 2010 2011 2012 2013

0.30 0.43 0.27 0.15 0.11 0.00 0.00 0.00 0.00 0.00

Exercise Numberprice under option

$0.60 200,000

Total dividends declared (cents per share)Share price at financial year end ($A)

Sales revenue

The factors that are considered to affect total shareholders return ('TSR') are summarised below:

Unissued ordinary shares of Advanced Surgical Design & Manufacture Limited under option at the date of this reportare as follows:

15 November 2007 16 November 2013

EBITDA

The earnings of the consolidated entity for the five years to 30 June 2013 are summarised below:

Shares under option

The Board considers that the above performance-linked remuneration structures will generate the desired outcomebased on the experience of other companies.

There were no shares of Advanced Surgical Design & Manufacture Limited issued on the exercise of options duringthe year ended 30 June 2013 and up to the date of this report.

In considering the consolidated entity’s performance and benefits for shareholders’ wealth, the Nomination andRemuneration Committee has regard to the consolidated entity’s earnings and any dividends paid together with shareprice performance since 1 July 2008.

Expiry dateGrant date

This concludes the remuneration report, which has been audited.

E Additional information

Notwithstanding the advances continued to be made by the consolidated entity during the year, the required EBITDAfor the year ended 30 June 2013 was not achieved so that bonus payments for key management personnel have notbeen paid.

Shares issued on the exercise of options

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●

●

The company has indemnified the directors and executives of the company for costs incurred, in their capacity as adirector or executive, for which they may be held personally liable, except where there is a lack of good faith.

Officers of the company who are former audit partners of PwC

The directors are of the opinion that the services as disclosed in note 29 to the financial statements do notcompromise the external auditor’s independence requirements of the Corporations Act 2001 for the following reasons:

Non-audit servicesDetails of the amounts paid or payable to the auditor for non-audit services provided during the financial year by theauditor are outlined in note 29 to the financial statements.

No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings onbehalf of the company, or to intervene in any proceedings to which the company is a party for the purpose of takingresponsibility on behalf of the company for all or part of those proceedings.

all non-audit services have been reviewed and approved to ensure that they do not impact the integrity andobjectivity of the auditor, andnone of the services undermine the general principles relating to auditor independence as set out in APES110 Code of Ethics for Professional Accountants issued by the Accounting Professional and EthicalStandards Board, including reviewing or auditing the auditor’s own work, acting in a management or decision-making capacity for the company, acting as advocate for the company or jointly sharing economic risks andrewards.

The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may bebrought against the officers in their capacity as officers of entities in the company, and any other payments arisingfrom liabilities incurred by the officers in connection with such proceedings. This does not include such liabilities thatarise from conduct involving a wilful breach of duty by the officers or the improper use by the officers of their positionor of information to gain advantage for themselves or someone else or to cause detriment to the company. It is notpossible to apportion the premium between amounts relating to the insurance against legal costs and those relating toother liabilities.

During the financial year, the company paid a premium of $24,133 in respect of a contract to insure the directors andcompany secretary of the company against a liability to the extent permitted by the Corporations Act 2001.

Indemnity and insurance of auditor

There are no officers of the company who are former audit partners of PwC.

The company is of a kind referred to in Class Order 98/100, issued by the Australian Securities and InvestmentsCommission, relating to 'rounding-off'. Amounts in this report have been rounded off in accordance with that ClassOrder to the nearest thousand dollars, or in certain cases, the nearest dollar.

Rounding of amounts

The directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or byanother person or firm on the auditor's behalf), is compatible with the general standard of independence for auditorsimposed by the Corporations Act 2001.

The company has not, during or since the financial year, indemnified or agreed to indemnify the auditor of thecompany or any related entity against a liability incurred by the auditor.

Indemnity and insurance of officers

Proceedings on behalf of the company

During the financial year, the company has not paid a premium in respect of a contract to insure the auditor of thecompany or any related entity.

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Auditor's independence declaration

Sydney

30 August 2013

Director

________________________________Peter Kazacos

On behalf of the directors

A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is setout on the following page.

PwC continues in office in accordance with section 327 of the Corporations Act 2001.Auditor

This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act2001.

14

Vik

Stamp

15

Advanced Surgical Design and Manufacture Limited Corporate Governance Statement 30 June 2013 Advanced Surgical Design and Manufacture Limited (the ‘company’) is committed to good corporate governance practices. These practices which are reflected in the company’s policies are designed to protect and enhance shareholder interests and to ensure that there are appropriate levels of disclosure and accountability. The company has endorsed the updated Corporate Governance Principles and Recommendations with 2010 Amendments released by the ASX Corporate Governance Council (‘ASX Guidelines’) and seeks to follow them to the extent that it is practicable having regard to the size and nature of its operations. All of the Recommendations that applied for the financial year ended 30 June 2013 have been followed with the exception that the requirement of Recommendation 4.2 for an audit committee to have at least three members and consist only of non-executive directors has not been followed. The committee consists of all three directors and only two of them are non-executive. This had been considered appropriate having regard to the size of the company’s operations.

The company’s policies are regularly reviewed to ensure that they remain current and in accordance with good practice appropriate for the company’s business environment and the company’s circumstances. These policies are available on the Corporate Governance section of the company’s website. Set out below are the fundamental corporate governance practices of the company. The Board of Directors (the ‘Board’) Board composition The company’s constitution provides that the number of directors is to be determined by the Board but must be no less than 3 and no more than 10, with a broad range of expertise. The company currently has three directors: two non-executive directors, Peter Kazacos, the Chairman of the Board and John O’Meara in addition to one executive director, Peter Welsh, the Managing Director. The experience and tenure of the directors are set out in the Directors’ Report. Messrs Kazacos and O’Meara are considered independent by the Board. Consequently a majority of the Board comprises independent directors and the roles of chief executive officer and chair are performed by different people as required by good practice. Board members are committed to spending sufficient time to enable them to carry out their duties as directors of the company; any candidate will confirm that they have the necessary time to devote to their Board position prior to appointment. Responsibilities The Board’s primary role is the protection and enhancement of long-term shareholder value. To fulfil this role, the Board is responsible for the overall corporate governance of the company. The company’s Corporate Governance Policy, which is available in the Corporate Governance section of the company’s website, sets out the Board’s charter including the specific responsibilities of the Board. Corporate expectations are set out in the directors’ letters of appointment. The Board’s roles and responsibilities include formulating the company’s strategic direction, approving and monitoring capital expenditure, setting remuneration policies, appointing, removing and creating succession policies for directors and senior executives, establishing and monitoring the achievement of management’s goals and ensuring the integrity of internal control and management of information systems. The Board is also responsible for approving and monitoring financial, risk and other reporting. The Board has delegated responsibility for the day to day operation and administration of the company to the Chief Executive Officer. Responsibilities are delineated by formal authority delegations. Directors’ independence In accordance with the ASX Guidelines, an independent director is a non-executive director who is not a member of management and who is free of any business or other relationship that could materially interfere with, or could reasonably be perceived to materially interfere with, the independent exercise of their judgement. When determining the independent status of a director the Board considers whether the director:

1. is a substantial shareholder of the company or an officer of, or otherwise associated directly with, a substantial shareholder of the company;

2. is employed, or has previously been employed in an executive capacity by the company or consolidated entity, and there has not been a period of at least three years between ceasing such employment and serving on the Board;

16

Advanced Surgical Design and Manufacture Limited Corporate Governance Statement 30 June 2013

3. has within the last three years been a principal of a material professional adviser or a material consultant to the company or another group member, or an employee materially associated with the service provided;

4. is a material supplier or customer of the company or consolidated entity, or an officer of or otherwise associated directly or indirectly with a material supplier or customer; or

5. has a material contractual relationship with the company or consolidated entity other than as a director. The Board considers ‘material’ in this context to be where any director-related business relationship has represented, or is likely in future to represent the lesser of at least 5% of the company’s or the director-related business’ revenue or assets as appropriate dependent upon the nature of the business relationship. The Board considered the nature of the relevant industry competition, and the size and nature of each director-related business relationship, in arriving at this threshold. Director induction and education The company has, due to the Board’s size, an informal induction process. New directors are fully briefed about the nature of the business, current issues, the corporate strategy and the expectations of the company concerning performance of directors. Directors receive a formal letter of appointment setting out the key terms and conditions relevant to that appointment. Directors are given access to continuing education opportunities to update and enhance their skills and knowledge. Conflict of interests Directors must disclose to the Board any actual or potential conflicts of interest which may exist as soon as they become aware of the issue and comply with the Corporations Act 2001 provisions on disclosing interests and restrictions on voting, which generally will involve the conflicted director being absent from the meeting whilst the Board discusses the matter and not voting on the matter. Details of director-related entity transactions with the company are set out in the notes to the financial statements. Independent professional advice and access to company information Each director has the right of access to all relevant company information, to the company’s executives and to the company’s external auditors without management present to seek any clarification or additional information. In addition and subject to prior consultation with the Chairman, each director may seek independent professional advice from a suitably qualified adviser at the company’s expense. A copy of the advice received by the director is made available to all other members of the Board. Corporate reporting The Chief Executive Officer and the Chief Financial Officer give an annual written declaration to the Board that in their opinion the financial records of the company for the financial year have been properly maintained in accordance with section 286 of the Corporations Act 2001, the company’s financial statements and the notes to those statements for the financial year comply with accounting standards and present a true and fair view of the company’s financial condition and operational results. They have confirmed in writing to the Board that this declaration in relation to the financial year ended 30 June 2013 is founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial reporting risks. Board committees To assist in the execution of its responsibilities, the Board has established two Board committees, namely, a Nomination and Remuneration Committee and an Audit and Risk Committee. Each committee has its own charter setting out matters relevant to its composition and responsibilities. The charters are reviewed periodically by the Board and are available in the Corporate Governance section of the company’s website. The Board currently holds approximately 10 scheduled meetings each year, in addition to strategy and any extraordinary meetings at such other times as may be necessary to address any specific matters that may arise. Details of the number of meetings held by the Board, together with the number of meetings attended by each director are disclosed in the ‘Meeting of directors’ section within the Directors’ Report. The agenda for Board meetings is prepared in conjunction with the Chairman and Company Secretary. Standing items include the Chief Executive Officer’s report which may include strategic matters, sales report, report on operations, financial report, and company secretarial report which include governance and legal compliance. Monthly actual results are reported against budgets approved by the Board. Board papers are circulated in advance and minutes kept of all meetings.

17

Advanced Surgical Design and Manufacture Limited Corporate Governance Statement 30 June 2013 Nomination and Remuneration Committee Composition The Nomination and Remuneration Committee comprises the independent Chairman (Peter Kazacos), an independent non-executive director, John O’Meara, and Managing Director (Peter Welsh). Each member has the expertise to enable the committee to effectively discharge its mandate. Details of each director’s experience and background are outlined in the ‘Information on directors’ section within the Directors’ Report. Meetings and reporting The Nomination and Remuneration Committee meet as and when required. Details of attendance at committee meetings are set in the ‘Information on directors’ section within the Directors’ Report. All committee minutes are tabled at Board meetings for review. Responsibilities The responsibilities of the Nomination and Remuneration Committee include reviewing Board succession plans, evaluating Board performance and making recommendations to the Board on executive remuneration packages, policies and incentives and remuneration framework for directors. The Committee is also responsible for the regular review of, and reporting to the Board about, the application of the company’s Diversity Policy including considering the proportion of women at all levels of the company. The Nomination and Remuneration Committee’s charter is posted on the company’s website under ‘Corporate Governance’. Performance assessment The Nomination and Remuneration Committee has in place an annual self-assessment questionnaire to facilitate evaluation of the performance of the Board, its committees and directors. The performance criteria used takes into account each director’s contribution to setting the direction, strategy and financial objectives of the company. The Committee makes a recommendation on its findings to the Board. The Committee’s nomination of existing directors for reappointment is not automatic and is contingent on their achievement, performance and contribution to the company and on the current and future needs of the Board and the company. New directors The individual directors and the Board as a whole recognise the importance for the Board to have the skills, knowledge, experience and diversity of background required to effectively steer the company over time in response to market developments, opportunities and challenges. The Board recognises certain core skills that are required for the Board to ensure effective stewardship of the company. These include business and strategic expertise, experience with financial markets, industry knowledge, accounting and finance skills, project management experience and personal ethics, attributes and skills. In view of the expected growth of the company the Board maintains an ongoing process to ensure its composition is appropriate. Consequently, the Board through its Nomination and Remuneration Committee, bearing in mind the fiscal constraints facing the company, may seek to identify a suitable candidate who is available for appointment as an additional director. The terms and conditions of the appointment and retirement of non-executive directors are set out in a letter of appointment, including expectations for attendance and preparation for all Board meetings, the procedures for dealing with conflicts of interest, and the availability of independent professional advice. Executive performance assessment The Board, through the Nomination and Remuneration Committee, has established performance criteria for the Chief Executive Officer (‘CEO’) and conducts a performance review of the CEO at least annually. The Chief Executive Officer conducts an annual review of performance of senior executives and reports on their performance to the Committee. The results are discussed at a Board meeting with the outcome determining the payment of bonuses and vesting of any relevant options granted under the Employee Share Option Plan. The performance appraisal includes assessment of the respective executive’s performance against key performance objectives set out at the beginning of each financial year. Further details on the performance review process that took place for the financial year ended 30 June 2013 for the Chief Executive Officer and senior executives is discussed in the ‘Remuneration Report’ which forms part of the Directors’ Report.

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Advanced Surgical Design and Manufacture Limited Corporate Governance Statement 30 June 2013 Remuneration Details of the remuneration of executives and directors and the company’s remuneration objectives and policies are set out in the Remuneration Report section of the Directors’ Report. Audit and Risk Committee The role of the Audit and Risk Committee is set out in a formal charter approved by the Board. This charter is available on the company website under ‘Corporate Governance’ along with information on procedures for the selection and appointment of the external auditor, and for the rotation of external audit engagement partners. Composition, meetings and reporting The Audit and Risk Committee comprises John O’Meara and Peter Kazacos who are non-executive independent directors and Peter Welsh. The committee chairman is John O’Meara who is not the Chairman of the Board. Each member has the expertise to enable the committee to effectively discharge its mandate. Details of each director’s experience and background are outlined in the ‘Information of directors’ section in the Directors’ Report. The Audit and Risk Committee meets as required to consider the company’s annual budget and strategic plan review, half-year financial results, full-year financial results and risk management process. The company’s external auditor (PwC) is invited to attend at least two Audit and Risk Committee meetings per annum. The chairman of the Audit and Risk Committee meets (at least annually) with the external auditor in the absence of management. The Chief Financial Officer is invited to Audit and Risk Committee meetings at the discretion of the Committee. All committee minutes are tabled at Board meetings for review. Responsibilities The primary function of the Audit and Risk Committee is to assist the Board in discharging its responsibility to exercise due care, diligence and skill in relation to: • fulfilling the company’s accounting and financial reporting obligations; • maintaining an effective and efficient audit; • the effectiveness of the internal control environment; • prudent management of financial and other risks; and • reviewing the effectiveness and efficiency of operations. External auditors The Audit and Risk Committee reviews the performance of the external auditor on an annual basis ensuring that the external auditor meets the required standards for auditor independence. The committee meets with the auditor during the year to review the results and findings of the auditor in respect of financial reports, the adequacy of accounting and financial controls, and to monitor the implementation of any recommendations made. The external auditor attends the company’s Annual General Meeting and is available at that meeting to answer shareholder questions regarding the conduct of the company’s audit and the preparation and content of the auditor’s report.

Risk assessment and management The company manages material business risks under a risk management policy which is available on its website under ‘Corporate Governance’. There is an ongoing program to identify, monitor and manage compliance issues and material business risks with a view to enhancing the value of every shareholder’s investment and safeguarding the company’s investments. The Board reviews the identification, management and reporting of risk as part of the annual budget process. More frequent reviews are undertaken as conditions or events dictate. The Audit and Risk Committee has the responsibility for ensuring the effectiveness of risk management and internal compliance and control. As part of the review process the committee considers the extent to which the risk process has been successful in retrospect with regard to the identification and mitigation of risks. This is required at all times and the Board actively promotes a culture of quality and integrity. The company has developed a set of policies and procedures (set out in the company’s procedures manual) in relation to the company’s compliance and risk programs. The company does not have an internal audit function due to its size; however the procedures and policies are controlled documents and subject to annual review.

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Advanced Surgical Design and Manufacture Limited Corporate Governance Statement 30 June 2013 The Board recognises that no cost-effective internal control system will preclude the possibility of errors and irregularities. The company has insurance, including product liability and professional indemnity insurance, to cover unexpected or unforeseen events and reduce any adverse consequences. Code of Conduct The Board has adopted a Code of Conduct which sets out the company’s obligations and standard of conduct for directors and employees when dealing with each other, competitors, customers and the community. The Code outlines not only practices necessary to maintain confidence in the company’s integrity and to take into account its legal obligations and the expectations of its stakeholders but also the responsibility and accountability of individuals for reporting and investigating reports of unethical practices. The Code of Conduct is posted on the company’s website under ‘Corporate Governance’. Diversity Policy The Board recognises the value and importance of diversity, including with respect to gender, ethnicity, geographical location, personal attributes and age. The company has established a Diversity Policy complying with the ASX Guidelines, a copy of which is available on the company website under ‘Corporate Governance’. At the beginning of the financial year approximately one third of the employees of the company were women and a similar proportion of executives were also women. By year’s end the proportion of women employees in the company has increased to 50% and the proportion of women in senior executive positions has similarly increased. Accordingly, its objective for the year of maintaining the existing proportion (approximately one-third women) of gender balance within the organisation and at senior executive level other than at Board level has been exceeded. There are currently no women on the Board but the process to identify an appropriate candidate for appointment to the Board is in part to provide an opportunity for a suitably qualified woman to be appointed. There is no gender disparity in the level of remuneration paid. The Board considers that its existing policies are appropriate at this stage in the company’s development and that any increase in the proportion of women at all levels of the work force is dependent upon the extent to which vacancies occur in the existing work force and any change in the size of the work force. The gender balance will continue to be monitored with a view to maintaining the existing proportions and reassessing as circumstances warrant. This forms a KPI for the Board, Managing Director, Chief Executive Officer and senior executives. Trading in general company securities by directors and employees The company has implemented a Securities Dealing Policy (‘Policy’) to prevent “insider trading” in the company’s securities by directors, senior management and any other employees or individuals who for the purposes of the Policy are deemed to be Relevant Employees as well as persons associated with them. A person undertakes insider training if that person trades in the company’s securities while possessing information about the company that is not generally available and is price sensitive. The Policy restricts the times when directors, senior management and all other employees covered by the Policy may trade in the company’s securities in addition to the above referenced general legal prohibition. The policy also prohibits transactions in associated products which limit risk of participating in unvested entitlements under any equity based remuneration schemes. All trading in the company’s securities requires clearance from the company.

A copy of the Policy is available on the company website under ‘Corporate Governance’.

Continuous disclosure and shareholder communication The company is committed to promoting effective communications with shareholders by ensuring they and the investment market generally are provided with full and timely disclosure of its activities. The company provides shareholders with periodic updates on its business. Shareholders are encouraged to communicate by electronic means and to participate at the Annual General Meeting, to ensure a high level of accountability and identification with the company’s strategy and goals. The company’s Shareholder Communication Policy is available on its website under ‘Corporate Governance’. Information is advised to shareholders in accordance with the company’s Continuous Disclosure Policy which includes identifying matters that may have a material effect on the price of the company’s securities, notifying them to the ASX, displaying them on the company’s website, and issuing media releases. The Company Secretary is responsible for ensuring compliance with the policy which accords with the disclosure requirements under the ASX Listing Rules. The company’s Continuous Disclosure Policy is also available in the Corporate Governance section of the company’s website.

20

Page

222425262766

67

Unit 212 Frederick StreetSt Leonards NSW 2065

A description of the nature of the consolidated entity's operations and its principal activities are included in thedirectors' report, which is not part of the financial report.

The financial report was authorised for issue, in accordance with a resolution of directors, on 30 August 2013. Thedirectors have the power to amend and reissue the financial report.

General information

The financial report covers Advanced Surgical Design & Manufacture Limited as a consolidated entity consisting ofAdvanced Surgical Design & Manufacture Limited and the entities it controlled. The financial report is presented inAustralian dollars, which is Advanced Surgical Design & Manufacture Limited's functional and presentation currency.

Contents

Financial report

Notes to the financial statementsDirectors' declaration

Independent auditor's report to the members of Advanced Surgical Design & Manufacture Limited

The financial report consists of the financial statements, notes to the financial statements and the directors'declaration.

Statement of profit or loss and other comprehensive incomeStatement of financial positionStatement of changes in equityStatement of cash flows


30 June 2013Financial report

Advanced Surgical Design & Manufacture Limited is a listed public company limited by shares, incorporated anddomiciled in Australia. Its registered office and principal place of business is:

21

Note 2013 2012$'000 $'000

4 7,175 8,112

5 668 611

(3,312) (3,342)(2,036) (2,219)(1,146) (1,297)(1,567) (1,365)

6 (270) (284)

(488) 216

7 - (425)

(488) (209)

8 (83) 36

25 (571) (173)

(45) (2)

(45) (2)

(616) (175)

(533) (211)(83) 36

(616) (175)

Foreign currency translationItems that may be reclassified subsequently to profit or loss

Total comprehensive income for the year is attributable to:Continuing operations

Loss after income tax expense from continuing operations


Loss after income tax expense for the year attributable to the owners of Advanced Surgical Design & Manufacture Limited

Income tax expense

Other income

Revenue from continuing operations

Corporate and administration expensesQuality and research and development expensesSales and marketing expensesFinance costs

Other comprehensive income


For the year ended 30 June 2013Statement of profit or loss and other comprehensive income

Consolidated

Cost of sales and purchases of consumablesExpenses

Discontinued operations

Profit/(loss) before income tax expense from continuing operations

Other comprehensive income for the year, net of tax

Total comprehensive income for the year

The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes

22

Note 2013 2012$'000 $'000


For the year ended 30 June 2013Statement of profit or loss and other comprehensive income

Consolidated

Cents Cents

37 (1.27) (0.59)37 (1.27) (0.59)

37 (0.22) 0.10 37 (0.22) 0.10

37 (1.49) (0.49)37 (1.49) (0.49)

Basic earnings per share

Diluted earnings per share


Earnings per share from discontinued operations attributable to the owners of Advanced Surgical Design & Manufacture LimitedBasic earnings per share

Earnings per share for loss attributable to the owners of Advanced Surgical Design & Manufacture Limited

Earnings per share from continuing operations attributable to the owners of Advanced Surgical Design & Manufacture Limited



The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes

23

Note 2013 2012$'000 $'000

9 287 1 10 1,628 1,797 11 3,117 5,597 12 544 605 13 2,343 -

7,919 8,000

14 118 192 15 2,567 3,159 16 153 256

2,838 3,607

10,757 11,607

17 1,736 4,517 18 1,139 887 19 137 129

3,012 5,533 20 2,556 -

5,568 5,533

21 739 1,700 22 247 339

986 2,039

6,554 7,572

4,203 4,035

23 9,602 8,818 24 521 566 25 (5,920) (5,349)

4,203 4,035

Reserves

Property, plant and equipmentIntangibles

Total liabilities

Liabilities

Total non-current assets

Current assets

Assets

Cash and cash equivalents

Accumulated losses

Trade and other receivablesInventoriesIncome tax refund due

Total current liabilities

Current liabilities

Non-current assets

Total current assets

Receivables

Current assets classified as held for sale

Total equity

Total non-current liabilities

Net assets

Liabilities directly associated with assets classified as held for sale

Borrowings

Advanced Surgical Design & Manufacture LimitedStatement of financial positionAs at 30 June 2013

Consolidated

Trade and other payablesBorrowingsProvisions

Total assets

Issued capitalEquity

Non-current liabilities

Provisions

The above statement of financial position should be read in conjunction with the accompanying notes

24

Totalequity

$'000 $'000 $'000 $'000

8,855 568 (5,176) 4,247

- - (173) (173)

- - - (2) - (2)

- - - (2) (173) (175)

(37) - - (37)

- - 8,818 566 (5,349) 4,035

Totalequity

$'000 $'000 $'000 $'000

8,818 566 (5,349) 4,035

- - (571) (571)

- - - (45) - (45)

- - - (45) (571) (616)

784 - - 784

- - 9,602 521 (5,920) 4,203

Transactions with owners in their capacity as owners:

Balance at 30 June 2013

Contributions of equity, net of transaction costs (note 23)

Issuedcapital


Loss after income tax expense for the year


Balance at 1 July 2012


For the year ended 30 June 2013Statement of changes in equity




Tax effect on transaction costs arising on share issue


Consolidated

Transactions with owners in their capacity as owners:

Reserves lossesAccumulated

capitalIssued

ReservesAccumulated

losses

ConsolidatedBalance at 1 July 2011

The above statement of changes in equity should be read in conjunction with the accompanying notes

25

Note 2013 2012$'000 $'000

8,338 8,893 (8,151) (8,195)

187 698 7 10

(270) (284)605 -

36 529 424

15 (307) (356)16 (11) (40)

(318) (396)

23 872 - - 200

(88) - (325) (239)(200) -

259 (39)

470 (11)(183) (172)

9 287 (183)

Income taxes refunded

Consolidated

Cash flows from operating activitiesReceipts from customers (inclusive of GST)

Interest received

Payments to suppliers and employees (inclusive of GST)

Interest and other finance costs paid

Net cash from operating activities


For the year ended 30 June 2013Statement of cash flows

Cash and cash equivalents at the beginning of the financial year

Cash and cash equivalents at the end of the financial year

Cash flows from investing activities

Net cash from/(used in) financing activities

Payments for property, plant and equipmentPayments for intangibles

Proceeds from issue of shares

Share issue transaction costs

Repayments from borrowings - related party

Net increase/(decrease) in cash and cash equivalents

Proceeds from borrowings - related party

Cash flows from financing activities

Net cash used in investing activities

Repayment of lease liabilities

The above statement of cash flows should be read in conjunction with the accompanying notes

26

The consolidated entity has adopted all of the new, revised or amending Accounting Standards and Interpretationsissued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period.

New, revised or amending Accounting Standards and Interpretations adopted

AASB 2011-9 Amendments to Australian Accounting Standards - Presentation of Items of Other ComprehensiveIncome

Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not beenearly adopted.

Any significant impact on the accounting policies of the consolidated entity from the adoption of these AccountingStandards and Interpretations are disclosed below. The adoption of these Accounting Standards and Interpretationsdid not have any significant impact on the financial performance or position of the consolidated entity.

The following Accounting Standards and Interpretations is most relevant to the consolidated entity:


30 June 2013Notes to the financial statements

The principal accounting policies adopted in the preparation of the financial statements are set out below. Thesepolicies have been consistently applied to all the years presented, unless otherwise stated.

These general purpose financial statements have been prepared in accordance with Australian Accounting Standardsand Interpretations issued by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001, asappropriate for for-profit oriented entities. These financial statements also comply with International FinancialReporting Standards as issued by the International Accounting Standards Board ('IASB').

Note 1. Significant accounting policies

The consolidated entity has applied AASB 2011-9 amendments from 1 July 2012. The amendments requiresgrouping together of items within other comprehensive income on the basis of whether they will eventually be'recycled' to the profit or loss (reclassification adjustments). The change provides clarity about the nature of itemspresented as other comprehensive income and the related tax presentation. The amendments also introduced theterm 'Statement of profit or loss and other comprehensive income' clarifying that there are two discrete sections, theprofit or loss section (or separate statement of profit or loss) and other comprehensive income section.

Critical accounting estimatesThe preparation of the financial statements requires the use of certain critical accounting estimates. It also requiresmanagement to exercise its judgement in the process of applying the consolidated entity's accounting policies. Theareas involving a higher degree of judgement or complexity, or areas where assumptions and estimates aresignificant to the financial statements, are disclosed in note 2.

Parent entity information

Historical cost conventionThe financial statements have been prepared under the historical cost convention.

Basis of preparation

In accordance with the Corporations Act 2001, these financial statements present the results of the consolidatedentity only. Supplementary information about the parent entity is disclosed in note 33.

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Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates ofthe transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from thetranslation at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currenciesare recognised in profit or loss.

The acquisition of subsidiaries is accounted for using the acquisition method of accounting. Refer to the 'businesscombinations' accounting policy for further details. A change in ownership interest, without the loss of control, isaccounted for as an equity transaction, where the difference between the consideration transferred and the bookvalue of the share of the non-controlling interest acquired is recognised directly in equity attributable to the parent.

Principles of consolidation

Where the consolidated entity loses control over a subsidiary, it derecognises the assets including goodwill, liabilitiesand non-controlling interest in the subsidiary together with any cumulative translation differences recognised in equity.The consolidated entity recognises the fair value of the consideration received and the fair value of any investmentretained together with any gain or loss in profit or loss.

Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated entityare eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment ofthe asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistencywith the policies adopted by the consolidated entity.

Subsidiaries are all those entities over which the consolidated entity has the power to govern the financial andoperating policies, generally accompanying a shareholding of more than one-half of the voting rights. The effects ofpotential exercisable voting rights are considered when assessing whether control exists. Subsidiaries are fullyconsolidated from the date on which control is transferred to the consolidated entity. They are de-consolidated fromthe date that control ceases.

The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Advanced SurgicalDesign & Manufacture Limited ('company' or 'parent entity') as at 30 June 2013 and the results of all subsidiaries forthe year then ended. Advanced Surgical Design & Manufacture Limited and its subsidiaries together are referred to inthese financial statements as the 'consolidated entity'.

Foreign currency transactions

Note 1. Significant accounting policies (continued)

The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposedof.

The financial report is presented in Australian dollars, which is Advanced Surgical Design & Manufacture Limited'sfunctional and presentation currency.

The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at thereporting date. The revenues and expenses of foreign operations are translated into Australian dollars using theaverage exchange rates, which approximate the rate at the date of the transaction, for the period. All resulting foreignexchange differences are recognised in other comprehensive income through the foreign currency reserve in equity.

Operating segments

Foreign currency translation

Operating segments are presented using the 'management approach', where the information presented is on thesame basis as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM isresponsible for the allocation of resources to operating segments and assessing their performance.

Foreign operations

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●

●

Income tax

When the taxable temporary difference is associated with investments in subsidiaries, associates orinterests in joint ventures, and the timing of the reversal can be controlled and it is probable that thetemporary difference will not reverse in the foreseeable future.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probablethat future taxable amounts will be available to utilise those temporary differences and losses.

Lease incomeLease income from operating leases is recognised in income on an accrual basis.

The consolidated entity recognises revenue when the amount of revenue can be reliably measured, it is probable thatfuture economic benefits will flow to the entity and specific criteria have been met for each of the consolidated entity’sactivities as described below. The amount of revenue is not considered to be reliably measurable until allcontingencies relating to the sale have been resolved. The consolidated entity bases its estimates on historicalresults, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.

The carrying amount of recognised and unrecognised deferred tax assets are reviewed each reporting date. Deferredtax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be availablefor the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extentthat it is probable that there are future taxable profits available to recover the asset.

When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset orliability in a transaction that is not a business combination and that, at the time of the transaction, affectsneither the accounting nor taxable profits; or

InterestInterest revenue is recognised as interest accrues using the effective interest method. This is a method of calculatingthe amortised cost of a financial asset and allocating the interest income over the relevant period using the effectiveinterest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of thefinancial asset to the net carrying amount of the financial asset.

Other revenueOther revenue is recognised when it is received or when the right to receive payment is established.

Sale of goodsA sale is recorded when goods have been shipped to the customer, the customer has accepted the goods andcollectability of the related receivables is probable.

The income tax expense or benefit for the period is the tax payable on that period's taxable income based on theapplicable income tax rate for each jurisdiction, adjusted by changes in deferred tax assets and liabilities attributableto temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable.

Discontinued operations

Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply whenthe assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted,except for:

A discontinued operation is a component of the consolidated entity that has been disposed of or is classified as heldfor sale and that represents a separate major line of business or geographical area of operations, is part of a singleco-ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusivelywith a view to resale. The results of discontinued operations are presented separately on the face of the statement ofprofit or loss and other comprehensive income.

Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assetsagainst current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the sametaxable authority on either the same taxable entity or different taxable entity's which intend to settle simultaneously.

Revenue recognition


29



Loans and receivablesLoans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted inan active market. They are carried at amortised cost using the effective interest rate method. Gains and losses arerecognised in profit or loss when the asset is derecognised or impaired.

Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using theeffective interest method, less any provision for impairment. Trade receivables are generally due for settlement within30 days.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs ofcompletion and the estimated costs necessary to make the sale.

Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term,highly liquid investments with original maturities of three months or less that are readily convertible to known amountsof cash and which are subject to an insignificant risk of changes in value. For the statement of cash flowspresentation purposes, cash and cash equivalents also includes bank overdrafts, which are shown within borrowingsin current liabilities on the statement of financial position.

Other receivables are recognised at amortised cost, less any provision for impairment.

Trade and other receivables

Raw materials, work in progress and finished goods are stated at the lower of cost and net realisable value on a 'firstin first out' basis. Cost comprises direct materials and delivery costs, direct labour, import duties and other taxes, anappropriate proportion of variable and fixed overhead expenditure based on normal operating capacity. Costs ofpurchased inventory are determined after deducting rebates and discounts received or receivable.

Investments and other financial assets



Inventories

Investments and other financial assets are initially measured at fair value. Transaction costs are included as part ofthe initial measurement, except for financial assets at fair value through profit or loss. They are subsequentlymeasured at either amortised cost or fair value depending on their classification. Classification is determined basedon the purpose of the acquisition and subsequent reclassification to other categories is restricted. The fair values ofquoted investments are based on current bid prices. For unlisted investments, the consolidated entity establishes fairvalue by using valuation techniques. These include the use of recent arm's length transactions, reference to otherinstruments that are substantially the same, discounted cash flow analysis, and option pricing models.

Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectable arewritten off by reducing the carrying amount directly. A provision for impairment of trade receivables is raised whenthere is objective evidence that the consolidated entity will not be able to collect all amounts due according to theoriginal terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enterbankruptcy or financial reorganisation and default or delinquency in payments (more than 60 days overdue) areconsidered indicators that the trade receivable may be impaired. The amount of the impairment allowance is thedifference between the asset’s carrying amount and the present value of estimated future cash flows, discounted atthe original effective interest rate. Cash flows relating to short-term receivables are not discounted if the effect ofdiscounting is immaterial.

Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired orhave been transferred and the consolidated entity has transferred substantially all the risks and rewards of ownership.

30



The determination of whether an arrangement is or contains a lease is based on the substance of the arrangementand requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific assetor assets and the arrangement conveys a right to use the asset.

A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially allthe risks and benefits incidental to ownership of leased assets, and operating leases, under which the lessoreffectively retains substantially all such risks and benefits.

Fixtures and fittings

Leasehold improvements and plant and equipment under lease are depreciated over the unexpired period of thelease or the estimated useful life of the assets, whichever is shorter.

Leased assets acquired under a finance lease are depreciated over the asset's useful life or over the shorter of theasset’s useful life and the lease term if there is no reasonable certainty that the consolidated entity will obtainownership at the end of the lease term.

Leasehold improvements2-10 years2-10 years

An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefitto the consolidated entity. Gains and losses between the carrying amount and the disposal proceeds are taken toprofit or loss.

The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at eachreporting date.

The consolidated entity assesses at the end of each reporting period whether there is any objective evidence that afinancial asset or group of financial assets is impaired. Objective evidence includes significant financial difficulty of theissuer or obligor; a breach of contract such as default or delinquency in payments; the lender granting to a borrowerconcessions due to economic or legal reasons that the lender would not otherwise do; it becomes probable that theborrower will enter bankruptcy or other financial reorganisation; the disappearance of an active market for thefinancial asset; or observable data indicating that there is a measurable decrease in estimated future cash flows.

Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant andequipment over their expected useful lives as follows:

Leases

Impairment of financial assets

2-20 years

The amount of the impairment allowance for loans and receivables carried at amortised cost is the differencebetween the asset’s carrying amount and the present value of estimated future cash flows, discounted at the originaleffective interest rate. If there is a reversal of impairment, the reversal cannot exceed the amortised cost that wouldhave been recognised had the impairment not been made and is reversed to profit or loss.


Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical costincludes expenditure that is directly attributable to the acquisition of the items.

Plant and equipment

Finance leases are capitalised. A lease asset and liability are established at the lease inception at the fair value of theleased assets, or if lower, the present value of minimum lease payments. Lease payments are allocated between theprincipal component of the lease liability and the finance costs, so as to achieve a constant rate of interest on theremaining balance of the liability.

2-13 years

Lease make goodInstrument sets 5-7 years

Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on a straight-line basis over the term of the lease.

Property, plant and equipment

31



Finance costsFinance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs areexpensed in the period in which they are incurred, including:

- interest on short-term and long-term borrowings- interest on finance leases

Impairment of non-financial assets

Where there is an unconditional right to defer settlement of the liability for at least 12 months after the reporting date,the loans or borrowings are classified as non-current.


- interest on the bank overdraft

Significant costs associated with the development of the revenue generating aspects of the website, including thecapacity of placing orders, are deferred and amortised on a straight-line basis over the period of their expectedbenefit, being their finite life of between 10 and 20 years.

These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of thefinancial year and which are unpaid. Due to their short-term nature they are measured at amortised cost and are notdiscounted. The amounts are unsecured and are usually paid within 30 days of recognition.

Patents and trademarks

Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and are testedannually for impairment, or more frequently if events or changes in circumstances indicate that they might beimpaired. Other non-financial assets are reviewed for impairment whenever events or changes in circumstancesindicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by whichthe asset's carrying amount exceeds its recoverable amount.

Significant costs associated with patents and trademarks are deferred and amortised on a straight-line basis over theperiod of their expected benefit, being their finite life of between 1 and 20 years.

Recoverable amount is the higher of an asset’s fair value less costs to sell and value-in-use. The value-in-use is thepresent value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to theasset or cash-generating unit to which the asset belongs. Assets that do not have independent cash flows aregrouped together to form a cash-generating unit.

Research and developmentResearch costs are expensed in the period in which they are incurred. Development costs are capitalised when it isprobable that the project will be a success considering its commercial and technical feasibility; the consolidated entityis able to use or sell the asset; the consolidated entity has sufficient resources; and intent to complete thedevelopment and its costs can be measured reliably.

Borrowings

Trade and other payables

Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs.They are subsequently measured at amortised cost using the effective interest method.

Intangible assets

Website

Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fairvalue at the date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Indefinite lifeintangible assets are not amortised and are subsequently measured at cost less any impairment. Finite life intangibleassets are subsequently measured at cost less amortisation and any impairment. The gains or losses recognised inprofit or loss arising from the derecognition of intangible assets are measured as the difference between net disposalproceeds and the carrying amount of the intangible asset. The method and useful lives of finite life intangible assetsare reviewed annually. Changes in the expected pattern of consumption or useful life are accounted for prospectivelyby changing the amortisation method or period.

32



Wages and salaries and annual leave

Provisions


Provisions are recognised when the consolidated entity has a present (legal or constructive) obligation as a result of apast event, it is probable the consolidated entity will be required to settle the obligation, and a reliable estimate can bemade of the amount of the obligation. The amount recognised as a provision is the best estimate of the considerationrequired to settle the present obligation at the reporting date, taking into account the risks and uncertaintiessurrounding the obligation. If the time value of money is material, provisions are discounted using a current pre-taxrate specific to the liability. The increase in the provision resulting from the passage of time is recognised as a financecost.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net oftax, from the proceeds.

The fair value of options granted under the ASDM Option Plan is recognised as an employee benefit expense with acorresponding increase in equity. The fair value is measured at grant date and recognised over the period duringwhich the employees become unconditionally entitled to the options.

Issued capitalOrdinary shares are classified as equity.

Liabilities for wages and salaries, including non-monetary benefits, and annual leave expected to be settled within 12months of the reporting date are recognised in current liabilities in respect of employees' services up to the reportingdate and are measured at the amounts expected to be paid when the liabilities are settled.

Share-based compensation benefits are provided to employees via the ASDM Employee Option Plan and anemployee share scheme. Information relating to these schemes is set out in note 38.

Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred.

The liability for long service leave is recognised in current and non-current liabilities, depending on the unconditionalright to defer settlement of the liability for at least 12 months after the reporting date. The liability is measured as thepresent value of expected future payments to be made in respect of services provided by employees up to thereporting date using the projected unit credit method. Consideration is given to expected future wage and salarylevels, experience of employee departures and periods of service. Expected future payments are discounted usingmarket yields at the reporting date on national government bonds with terms to maturity and currency that match, asclosely as possible, the estimated future cash outflows.

Share-based payments

Defined contribution superannuation expense

Employee benefits

Long service leave

The fair value at grant date is independently determined using a Black-Scholes option pricing model that takes intoaccount the exercise price, the term of the option, the impact of dilution, the share price at grant date and expectedprice volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of theoption.

The fair value of the options granted is adjusted to reflect market vesting conditions, but excludes the impact of anynon-market vesting conditions (for example, profitability and sales growth targets). Non-market vesting conditions areincluded in assumptions about the number of options that are expected to become exercisable. At each reportingdate, the entity revises its estimate of the number of options that are expected to become exercisable. The employeebenefit expense recognised each period takes into account the most recent estimate. The impact of the revision tooriginal estimates, if any, is recognised in profit or loss with a corresponding adjustment to equity.

33



The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equityinstruments issued or liabilities incurred by the acquirer to former owners of the acquiree. For each businesscombination, the non-controlling interest in the acquiree is measured at either fair value or at the proportionate shareof the acquiree's identifiable net assets. All acquisition costs are expensed as incurred to profit or loss.

Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts theprovisional amounts recognised and also recognises additional assets or liabilities during the measurement period,based on new information obtained about the facts and circumstances that existed at the acquisition-date. Themeasurement period ends on either the earlier of (i) 12 months from the date of the acquisition or (ii) when theacquirer receives all the information possible to determine fair value.


Business combinations

Where the business combination is achieved in stages, the consolidated entity remeasures its previously held equityinterest in the acquiree at the acquisition-date fair value and the difference between the fair value and the previouscarrying amount is recognised in profit or loss.

The acquisition method of accounting is used to account for business combinations regardless of whether equityinstruments or other assets are acquired.

Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value. Subsequentchanges in the fair value of contingent consideration classified as an asset or liability is recognised in profit or loss.Contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for withinequity.

Basic earnings per shareBasic earnings per share is calculated by dividing the profit attributable to the owners of Advanced Surgical Design &Manufacture Limited, excluding any costs of servicing equity other than ordinary shares, by the weighted averagenumber of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary sharesissued during the financial year.

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take intoaccount the after income tax effect of interest and other financing costs associated with dilutive potential ordinaryshares and the weighted average number of shares assumed to have been issued for no consideration in relation todilutive potential ordinary shares.

Earnings per share

On the acquisition of a business, the consolidated entity assesses the financial assets acquired and liabilitiesassumed for appropriate classification and designation in accordance with the contractual terms, economicconditions, the consolidated entity's operating or accounting policies and other pertinent conditions in existence at theacquisition-date.

The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non-controllinginterest in the acquiree and the fair value of the consideration transferred and the fair value of any pre-existinginvestment in the acquiree is recognised as goodwill. If the consideration transferred and the pre-existing fair value isless than the fair value of the identifiable net assets acquired, being a bargain purchase to the acquirer, the differenceis recognised as a gain directly in profit or loss by the acquirer on the acquisition-date, but only after a reassessmentof the identification and measurement of the net assets acquired, the non-controlling interest in the acquiree, if any,the consideration transferred and the acquirer's previously held equity interest in the acquirer.


34



AASB 9 Financial Instruments, 2009-11 Amendments to Australian Accounting Standards arising from AASB 9, 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 and 2012-6 Amendments to AustralianAccounting Standards arising from AASB 9

New Accounting Standards and Interpretations not yet mandatory or early adopted

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxauthority.

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GSTrecoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement offinancial position.

Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is notrecoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or aspart of the expense.


The company is of a kind referred to in Class Order 98/100, issued by the Australian Securities and InvestmentsCommission, relating to 'rounding-off'. Amounts in this report have been rounded off in accordance with that ClassOrder to the nearest thousand dollars, or in certain cases, the nearest dollar.

Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financingactivities which are recoverable from, or payable to the tax authority, are presented as operating cash flows.

This standard and its consequential amendments are applicable to annual reporting periods beginning on or after 1January 2015 and completes phase I of the IASB's project to replace IAS 39 (being the international equivalent toAASB 139 'Financial Instruments: Recognition and Measurement'). This standard introduces new classification andmeasurement models for financial assets, using a single approach to determine whether a financial asset ismeasured at amortised cost or fair value. The accounting for financial liabilities continues to be classified andmeasured in accordance with AASB 139, with one exception, being that the portion of a change of fair value relatingto the entity’s own credit risk is to be presented in other comprehensive income unless it would create an accountingmismatch. The consolidated entity will adopt this standard from 1 July 2015 but the impact of its adoption is yet to beassessed by the consolidated entity.

Rounding of amounts

Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yetmandatory, have not been early adopted by the consolidated entity for the annual reporting period ended 30 June2013. The consolidated entity's assessment of the impact of these new or amended Accounting Standards andInterpretations, most relevant to the consolidated entity, are set out below.

AASB 10 Consolidated Financial StatementsThis standard is applicable to annual reporting periods beginning on or after 1 January 2013. The standard has a newdefinition of 'control'. Control exists when the reporting entity is exposed, or has the rights, to variable returns (e.g.dividends, remuneration, returns that are not available to other interest holders including losses) from its involvementwith another entity and has the ability to affect those returns through its 'power' over that other entity. A reporting entityhas power when it has rights (e.g. voting rights, potential voting rights, rights to appoint key management, decisionmaking rights, kick out rights) that give it the current ability to direct the activities that significantly affect the investee’sreturns (e.g. operating policies, capital decisions, appointment of key management). The consolidated entity will notonly have to consider its holdings and rights but also the holdings and rights of other shareholders in order todetermine whether it has the necessary power for consolidation purposes. The adoption of this standard from 1 July2013 may have an impact where the consolidated entity has a holding of less than 50% in an entity, has de factocontrol, and is not currently consolidating that entity.

Goods and Services Tax ('GST') and other similar taxes

35



This standard is applicable to annual reporting periods beginning on or after 1 January 2013. The standard defineswhich entities qualify as joint ventures and removes the option to account for joint ventures using proportionalconsolidation. Joint ventures, where the parties to the agreement have the rights to the net assets will use equityaccounting. Joint operations, where the parties to the agreements have the rights to the assets and obligations for theliabilities will account for the assets, liabilities, revenues and expenses separately, in accordance with the standardsapplicable to the particular assets, liabilities, revenues and expenses. The adoption of this standard from 1 July 2013will not have a material impact on the consolidated entity.

This standard is applicable to annual reporting periods beginning on or after 1 January 2013. It contains the entiredisclosure requirement associated with other entities, being subsidiaries, associates and joint ventures. Thedisclosure requirements have been significantly enhanced when compared to the disclosures previously located inAASB 127 'Consolidated and Separate Financial Statements', AASB 128 'Investments in Associates', AASB 131'Interests in Joint Ventures' and Interpretation 112 'Consolidation - Special Purpose Entities'. The adoption of thisstandard from 1 July 2013 will significantly increase the amount of disclosures required to be given by theconsolidated entity such as significant judgements and assumptions made in determining whether it has a controllingor non-controlling interest in another entity and the type of non-controlling interest and the nature and risks involved.

These amendments are applicable to annual reporting periods beginning on or after 1 July 2013, with early adoptionnot permitted. They amend AASB 124 'Related Party Disclosures' by removing the disclosure requirements forindividual key management personnel ('KMP'). The adoption of these amendments from 1 July 2013 will remove theduplication of information relating to individual KMP in the notes to the financial statements and the directors report.Corporations and Related Legislation Amendment Regulations 2013 and Corporations and Australian Securities andInvestments Commission Amendment Regulation 2013 (No. 1) now specify the KMP disclosure requirements to beincluded within the directors report for annual reporting periods beginning 1 July 2013.

AASB 12 Disclosure of Interests in Other Entities


This revised standard and its consequential amendments are applicable to annual reporting periods beginning on orafter 1 January 2013. The amendments eliminate the corridor approach for the deferral of gains and losses;streamlines the presentation of changes in assets and liabilities arising from defined benefit plans, including requiringremeasurements to be presented in other comprehensive income; and enhances the disclosure requirements fordefined benefit plans. The amendments also changed the definition of short-term employee benefits, from 'due to' to'expected to' be settled within 12 months. This will require annual leave that is not expected to be wholly settled within12 months to be discounted allowing for expected salary levels in the future period when the leave is expected to betaken. The adoption of the revised standard from 1 July 2013 is not expected to have a material impact on theconsolidated entity.

AASB 13 Fair Value Measurement and AASB 2011-8 Amendments to Australian Accounting Standards arising fromAASB 13

AASB 119 Employee Benefits (September 2011) and AASB 2011-10 Amendments to Australian AccountingStandards arising from AASB 119 (September 2011)

AASB 2011-4 Amendments to Australian Accounting Standards to Remove Individual Key Management PersonnelDisclosure Requirement

AASB 11 Joint Arrangements

This standard and its consequential amendments are applicable to annual reporting periods beginning on or after 1January 2013. The standard provides a single robust measurement framework, with clear measurement objectives,for measuring fair value using the 'exit price' and it provides guidance on measuring fair value when a marketbecomes less active. The 'highest and best use' approach would be used to measure assets whereas liabilities wouldbe based on transfer value. As the standard does not introduce any new requirements for the use of fair value, itsimpact on adoption by the consolidated entity from 1 July 2013 should be minimal, although there will be increaseddisclosures where fair value is used.

36



The amendments are applicable to annual reporting periods beginning on or after 1 January 2014. The disclosurerequirements of AASB 136 ‘Impairment of Assets' have been enhanced to require additional information about the fairvalue measurement when the recoverable amount of impaired assets is based on fair value less costs of disposals.Additionally, if measured using a present value technique, the discount rate is required to be disclosed. The adoptionof the amendments from 1 July 2014 may increase the disclosures by the consolidated entity.

These amendments are applicable to annual reporting periods beginning on or after 1 January 2013. They amendAASB 10 and related standards for the transition guidance relevant to the initial application of those standards. Theamendments clarify the circumstances in which adjustments to an entity’s previous accounting for its involvement withother entities are required and the timing of such adjustments. The adoption of these amendments will not have amaterial impact on the consolidated entity.

AASB 2012-9 Amendment to AASB 1048 arising from the Withdrawal of Australian Interpretation 1039This amendment is applicable to annual reporting periods beginning on or after 1 January 2013. The amendmentremoves reference in AASB 1048 following the withdrawal of Interpretation 1039. The adoption of this amendment willnot have a material impact on the consolidated entity.

AASB 2012-3 Amendments to Australian Accounting Standards - Offsetting Financial Assets and Financial Liabilities


The amendments are applicable to annual reporting periods beginning on or after 1 January 2013. The disclosurerequirements of AASB 7 'Financial Instruments: Disclosures' (and consequential amendments to AASB 132 'FinancialInstruments: Presentation') have been enhanced to provide users of financial statements with information aboutnetting arrangements, including rights of set-off related to an entity's financial instruments and the effects of suchrights on its statement of financial position. The adoption of the amendments from 1 July 2013 will increase thedisclosures by the consolidated entity.

AASB 2012-5 Amendments to Australian Accounting Standards arising from Annual Improvements 2009-2011 CycleThe amendments are applicable to annual reporting periods beginning on or after 1 January 2013. The amendmentsaffect five Australian Accounting Standards as follows: Confirmation that repeat application of AASB 1 (IFRS 1) 'First-time Adoption of Australian Accounting Standards' is permitted; Clarification of borrowing cost exemption in AASB 1;Clarification of the comparative information requirements when an entity provides an optional third column or isrequired to present a third statement of financial position in accordance with AASB 101 'Presentation of FinancialStatements'; Clarification that servicing of equipment is covered by AASB 116 'Property, Plant and Equipment', if suchequipment is used for more than one period; clarification that the tax effect of distributions to holders of equityinstruments and equity transaction costs in AASB 132 'Financial Instruments: Presentation' should be accounted forin accordance with AASB 112 ‘Income Taxes’; and clarification of the financial reporting requirements in AASB 134'Interim Financial Reporting' and the disclosure requirements of segment assets and liabilities. The adoption of theamendments from 1 July 2013 will not have a material impact on the consolidated entity.

The amendments are applicable to annual reporting periods beginning on or after 1 January 2014. The amendmentsadd application guidance to address inconsistencies in the application of the offsetting criteria in AASB 132 'FinancialInstruments: Presentation', by clarifying the meaning of "currently has a legally enforceable right of set-off"; andclarifies that some gross settlement systems may be considered to be equivalent to net settlement. The adoption ofthe amendments from 1 July 2014 will not have a material impact on the consolidated entity.

AASB 2012-2 Amendments to Australian Accounting Standards - Disclosures - Offsetting Financial Assets andFinancial Liabilities

AASB 2012-10 Amendments to Australian Accounting Standards – Transition Guidance and Other Amendments

The amendments are applicable to annual reporting periods beginning on or after 1 January 2013. The amendmentsmake numerous consequential changes to a range of Australian Accounting Standards and Interpretations, followingthe issuance of AASB 10, AASB 11, AASB 12 and revised AASB 127 and AASB 128. The adoption of theseamendments from 1 July 2013 will not have a material impact on the consolidated entity.

AASB 2013-3 Amendments to AASB 136 - Recoverable Amount Disclosures for Non-Financial Assets

AASB 2011-7 Amendments to Australian Accounting Standards arising from the Consolidation and JointArrangements Standards

37



Deferred tax assets are recognised for deductible temporary differences only if the consolidated entity considers it isprobable that future taxable amounts will be available to utilise those temporary differences and losses.

Recovery of deferred tax assets

Provision for impairment of inventories

A provision has been made for the present value of anticipated costs for future restoration of leased premises. Theprovision includes future cost estimates associated with finalisation of the premises. The calculation of this provisionrequires assumptions such as application of finalisation dates and cost estimates. The provision recognised for eachsite is periodically reviewed and updated based on the facts and circumstances available at the time. Changes to theestimated future costs for sites are recognised in the statement of financial position by adjusting both the expense orasset, if applicable, and provision.

Note 2. Critical accounting judgements, estimates and assumptions

The provision for impairment of inventories assessment requires a degree of estimation and judgement. The level ofthe provision is assessed by taking into account the recent sales experience, the ageing of inventories and otherfactors that affect inventory obsolescence.

The preparation of the financial statements requires management to make judgements, estimates and assumptionsthat affect the reported amounts in the financial statements. Management continually evaluates its judgements andestimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases itsjudgements, estimates and assumptions on historical experience and on other various factors, including expectationsof future events, management believes to be reasonable under the circumstances. The resulting accountingjudgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptionsthat have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer tothe respective notes) within the next financial year are discussed below.

Impairment of non-financial assets other than goodwill

Lease make good provision

The consolidated entity assesses impairment of non-financial assets other than goodwill at each reporting date byevaluating conditions specific to the consolidated entity and to the particular asset that may lead to impairment. If animpairment trigger exists, the recoverable amount of the asset is determined. This involves fair value less costs to sellor value-in-use calculations, which incorporate a number of key estimates and assumptions.

The consolidated entity determines the estimated useful lives and related depreciation and amortisation charges forits property, plant and equipment and finite life intangible assets. The useful lives could change significantly as aresult of technical innovations or some other event. The depreciation and amortisation charge will increase where theuseful lives are less than previously estimated lives, or technically obsolete or non-strategic assets that have beenabandoned or sold will be written off or written down.

Estimation of useful lives of assets

38



Considering the above and recent transaction described in Note 35- Events after the reporting period, the GoingConcern basis is deemed appropriate.

Note 2. Critical accounting judgements, estimates and assumptions (continued)

Going concern

Note 3. Operating segments

The consolidated entity operates predominately in one geographical region being Australia.

Major customersDuring the year ended 30 June 2013 approximately 27% ($2.1m) and 21% ($1.6m) (2012: 32% ($2.9m) and 29%($2.6m)) of the consolidated entity’s external revenue was derived from sales to two major hospital groups.

• The company has a debtors finance facility with $762,000 available to be drawn down as at the year ended 30 June2013.

• The company successfully raised $564,000 from capital raising and $187,000 from a rights issue net of transactioncosts.

These financial statements have been prepared on a going concern basis, which assumes continuity of normalbusiness activities and the realisation of assets and the settlement of liabilities in the ordinary course of business.

This statement is made after noting the following in relation to the financial affairs of the consolidated entity:

• The loss before tax and discontinued operations for the financial year ended 30 June 2013 was $488,000 (2012:$216,000) with positive cashflows from operations of $529,000 (2012: $424,000).

• Although net current assets are $2,351,000 (2012: $2,467,000), current liabilities include an amount of $2,546,000owed to a supplier for the purchase of inventory included in current assets of $2,343,000. Subsequent to year end theinventory was sold as disclosed in Note 35 and the liability has been settled.

• The consolidated entity has successfully renegotiated at reporting date an extension in the repayment of a relatedparty loan totalling $570,000 to be payable not before 31 December 2013 but before 30 June 2014.

Management reviews EBITDA to make decisions. The following table summarises key reconciling items betweenstatutory profit after tax attributable to the shareholders of Advanced Surgical Design & Manufacture Limited andEBITDA.

Identification of reportable operating segmentsThe consolidated entity operates in one segment being the sale, manufacture and design of surgical implants. This isbased on the internal reports that are reviewed and used by the Board of Directors (who are identified as the ChiefOperating Decision Makers ('CODM')) in assessing performance and in determining the allocation of resources.There is no aggregation of operating segments.

39



unallocated Total$'000 $'000 $'000 $'000 $'000 $'000

- - - - 788 788 (1,013)

7 (270)

(83)

(571) -

(571)

unallocated Total$'000 $'000 $'000 $'000 $'000 $'000

- - - - 1,431 1,431 (941)

10 (284)

36

252 (425)

(173)

For segment assets and liabilites refer to statement of financial position.

Note 3. Operating segments (continued)

EBITDA

Income tax expense

Intersegment

Profit before income tax expense

eliminations/

Depreciation and amortisation

Operating segment information

Income tax expense

Consolidated - 2012


eliminations/

Loss after income tax expense

Loss from discontinued operations

Loss after income tax expense

Intersegment

Consolidated - 2013

Interest revenue

EBITDA

Profit from discontinued operations

Finance costs

Loss before income tax expense

Finance costsInterest revenue

40



2013 2012$'000 $'000

7,156 7,954

7 10 12 148

- - 19 158

- - 7,175 8,112

2013 2012$'000 $'000

121 - 3 6

544 605

- - 668 611

From continuing operations

Revenue from continuing operations

Sale of goods

Other revenue

Other income

Interest

Other income

Consolidated

Net foreign exchange gain

Note 4. Revenue

Sales revenue

Research and development refund

Consolidated

Sub-lease rentals

Note 5. Other income

41



2013 2012$'000 $'000

293 325 223 227 44 33 40 60

299 234

- - 899 879

16 19 98 43

- - 114 62

- - 1,013 941

347 197 - 142

- - 347 339

270 284

- 16

665 762

204 238

25 -

2,112 2,560 Employee benefits expense excluding superannuation

Net foreign exchange loss

Interest and finance charges paid/payable

Consolidated

Total depreciation

Minimum lease payments

Inventories

Patents and trademarks

Fixtures and fittings

Superannuation expense

Profit/(loss) before income tax from continuing operations includes the following specific expenses:

Total amortisation

Note 6. Expenses

Total depreciation and amortisation

Finance costs

Rental expense relating to operating leases

Depreciation

Employee benefits expense excluding superannuation

Plant and equipment

Share-based payments expense

Lease make goodLeasehold improvements

Amortisation

Instrument sets

Net foreign exchange loss

Impairment

Trade receivables

Website

Total impairment

Defined contribution superannuation expense

Share-based payments expense

42



2013 2012$'000 $'000

- 425

- - - 425

- - - 425

- - - 425

(488) 216

(83) 36

- - (571) 252

(171) 76

3 3 7 -

363 403 - 168

(196) (452)

- - 6 198 - (198) - 462 (6) (37)

- - - 425

5,400 5,950

1,620 1,785

Income tax expense

Potential tax benefit @ 30%

Tax losses not recognised

Numerical reconciliation of income tax expense and tax at the statutory rate

Deferred tax asset from prior years derecognisedPrior year tax losses not recognised now recouped

Write-off of loan - ASDM (UK) Limited

Grant income from the research and development incentive grant is classified as other income and comparativefigures have been restated for comparative purposes.

Income tax expense

Tax effect amounts which are not deductible/(taxable) in calculating taxable income:

Tax at the statutory tax rate of 30%

Income tax expense is attributable to:

Aggregate income tax expense

Consolidated

Note 7. Income tax expense

Profit/(loss) before income tax (expense)/benefit from discontinued operations

Aggregate income tax expense

Entertainment expenses

Concessional research and development expenditure treatment

Unused tax losses for which no deferred tax asset has been recognised


The above potential tax benefit for tax losses has not been recognised in the statement of financial position. Thesetax losses can only be utilised in the future if the continuity of ownership test is passed, or failing that, the samebusiness test is passed.

Share raising cost recognised directly in equity

Deferred tax - origination and reversal of temporary differences

Sundry items

Profit from continuing operations

Profit/(loss) before income tax expense from continuing operations

43



2013 2012$'000 $'000

618 557 - - 618 557

(133) (173)(254) (68)(314) (280)

- - (701) (521)

- - (83) 36 - - - -

- - (83) 36

2013 2012$'000 $'000

(59) 117

- - (59) 117

2013 2012$'000 $'000

287 1

287 1 - (184)

- - 287 (183)

The above figures are reconciled to cash and cash equivalents at the end of the financial year as shown in the statement of cash flows as follows:

Corporate and administration expenses

Balance as per statement of cash flows

Bank overdraft (note 18)

Reconciliation to cash and cash equivalents at the end of the financial year

Balances as above

Consolidated

Cost of sales and purchases of consumables

Financial performance information

Revenue

Net increase/(decrease) in cash and cash equivalents from discontinued operations


Cash on hand

As noted in note 35, on 12 July 2013 the consolidated entity signed an agreement with Orthofix Australia Pty Ltd forthe disposal of its spinal business. This business has therefore been treated as a discontinued operation.

Consolidated

Description

Sales and marketing expense

Net cash from/(used in) operating activities

Note 8. Discontinued operations

Total expenses

Income tax expenseProfit/(loss) before income tax expense

Consolidated

Note 9. Current assets - cash and cash equivalents

Total revenue

Cash flow information

44



2013 2012$'000 $'000

1,221 1,593 177 - 230 204

- - 1,628 1,797

2013 2012$'000 $'000

- 122 - (5) - (117)

- - - -

2013 2012$'000 $'000

214 100 48 2

- - 262 102

Impairment of receivables

Foreign currency adjustmentOpening balance

Customers with balances past due but without provision for impairment of receivables amount to $262,000 as at 30June 2013 ($102,000 as at 30 June 2012).

Closing balance

Past due but not impaired

Movements in the provision for impairment of receivables are as follows:

Consolidated

These relate to a number of independent customers for whom there is no recent history of default.

The ageing of the past due but not impaired receivables are as follows:

1 to 2 months

Receivables written off during the year as uncollectable

3 to 4 months

Prepayments

Trade receivables

Consolidated

The consolidated entity has recognised a provision $nil (2012: $nil) in corporate and administration expenses in profitor loss, in respect of impairment of receivables for the year ended 30 June 2013.

Note 10. Current assets - trade and other receivables

Other receivables

Consolidated

45



2013 2012$'000 $'000

366 384 276 96

2,475 5,117

- - 3,117 5,597

2013 2012$'000 $'000

544 605

2013 2012$'000 $'000

2,343 -

2013 2012$'000 $'000

118 192

Note 13. Current assets - current assets classified as held for sale

Raw materials - at cost

Consolidated

Write downs of inventories to net realisable value recognised as an expense during the year ended 30 June 2013amounted to $347,000 (2012: $197,000). The expense has been included in ‘cost of sales and purchase ofconsumables’ in profit or loss.

Work in progress - at cost

Consolidated

Note 14. Non-current assets - receivables

Other receivables

Impaired receivables or receivables past dueNone of the non-current receivables are impaired or past due but not impaired.

Consolidated

Consolidated

Note 11. Current assets - inventories

Note 12. Current assets - income tax refund due

Inventories

Finished goods - at lower of cost or net realisable value

Income tax refund due

Refer to note 8.

46



2013 2012$'000 $'000

6,672 6,696 (5,732) (5,498)

- - 940 1,198

1,811 1,780 (1,342) (1,129)

- - 469 651

467 280 (301) (257)

- - 166 23

300 300 (300) (260)

- - - 40

2,529 2,485 (1,537) (1,238)

- - 992 1,247

- - 2,567 3,159

Total$'000 $'000 $'000 $'000 $'000 $'000

1,486 861 55 94 1,186 3,682 37 17 1 6 295 356

(325) (227) (33) (60) (234) (879)

1,198 651 23 40 1,247 3,159 10 66 187 - 44 307

(293) (223) (44) (40) (299) (899)

915 494 166 - 992 2,567

Property, plant and equipment secured under finance leasesRefer to note 31 for further information on property, plant and equipment secured under finance leases.

Less: Accumulated depreciation


setsfittingsFixtures and

Leasehold improvements - at cost

Plant and Instrument

Consolidated



equipment

Note 15. Non-current assets - property, plant and equipment

Lease make good - at cost

Fixtures and fittings - at cost

Instrument sets - at cost

Leasehold

ReconciliationsReconciliations of the written down values at the beginning and end of the current and previous financial year are setout below:

Lease make

Depreciation expense

improvements

Consolidated

good


Additions

Depreciation expense


Plant and equipment - at cost

Additions



47



2013 2012$'000 $'000

121 121 (109) (93)

- - 12 28

523 512 (382) (284)

- - 141 228

- - 153 256

Total$'000 $'000 $'000 $'000 $'000 $'000

- - - 47 231 278 - - - - 40 40 - - - (19) (43) (62)

- - - 28 228 256 - - - - 11 11 - - - (16) (98) (114)

- - - 12 141 153

2013 2012$'000 $'000

554 3,243 836 972 346 302

- - 1,736 4,517

Patents and

Consolidated


Amortisation expense


Less: Accumulated amortisation

Additions

trademarks

Website - at costLess: Accumulated amortisation

Reconciliations

Additions

Reconciliations of the written down values at the beginning and end of the current and previous financial year are setout below:

Patents and trademarks - at cost

Amortisation expense

Website


Trade payables

Note 17. Current liabilities - trade and other payables

Consolidated

Refer to note 27 for further information on financial instruments.

Consolidated

Note 16. Non-current assets - intangibles

Accrued expensesOther payables

48



2013 2012$'000 $'000

- 184 570 200 569 503

- - 1,139 887

2013 2012$'000 $'000

137 129

2013 2012$'000 $'000

2,546 - 10 -

- - 2,556 -

2013 2012$'000 $'000

- 570 739 1,130

- - 739 1,700

Note 19. Current liabilities - provisions

Consolidated

Employee benefits

Consolidated

Refer to note 27 for further information on financial instruments.

Employee benefits

Note 21. Non-current liabilities - borrowings

Note 18. Current liabilities - borrowings

Refer to note 21 for further information on assets pledged as security and financing arrangements and note 27 forfurther information on financial instruments.

Lease liabilityRelated party loansBank overdraft

Consolidated

Lease liability

Trade payables

Note 20. Current liabilities - liabilities directly associated with assets classified as held for sale

Related party loans

Refer to note 8.

Consolidated

49



2013 2012$'000 $'000

- 184 1,308 1,633

- - 1,308 1,817

2013 2012$'000 $'000

287 1 1,339 1,765

537 745

- - 2,163 2,511

2013 2012$'000 $'000

- 500 570 770

1,308 1,633 15 15

- - 1,893 2,918

- 184 570 770

1,308 1,633 - -

- - 1,878 2,587

- 316 - - - - 15 15

- - 15 331

The total secured liabilities (current and non-current) are as follows:

Related party borrowing facility

Plant and equipment

The carrying amounts of assets pledged as security for current and non-current borrowings are:

Lease liability


Note 21. Non-current liabilities - borrowings (continued)

Total facilities


Business card facility

Bank overdraft

Bank overdraft

Lease liability

Bank overdraft

Used at the reporting date

Consolidated

Financing arrangements

Lease liabilityBank overdraft


Consolidated

Consolidated


Business card facilityLease liability

Total secured liabilities

Unused at the reporting date

Assets pledged as security

Receivables

Unrestricted access was available at the reporting date to the following lines of credit:

50



2013 2012$'000 $'000

38 39 209 300

- - 247 339

Leasemake good

$'000

300 (91)

- - - - 209

2013 2012 2013 2012Shares Shares $'000 $'000

43,751,248 35,298,996 9,602 8,818

No of shares Issue price $'000

35,298,996 8,855

(37)

35,298,996 8,818 750,000 $0.11 25

5,407,349 $0.11 595 2,294,903 $0.11 252

(88)

43,751,248 9,602

Note 23. Equity - issued capital

Date

03 April 201313 February 2013

Details

Balance

1 July 2011Balance

Shares issued

Less: Tax effect on transaction costs arising on share issue

Consolidated

Amounts used

Employee benefits

Carrying amount at the end of the year

Note 22. Non-current liabilities - provisions

Lease make good

The provision represents the present value of the estimated costs to make good the premises leased by theconsolidated entity at the end of the respective lease terms.

Lease make good

30 June 2012

Consolidated

Movements in ordinary share capital

Ordinary shares - fully paid

Consolidated

Balance 30 June 2013

Shares issued

Consolidated - 2013Carrying amount at the start of the year

Movements in each class of provision during the current financial year, other than employee benefits, are set outbelow:

Movements in provisions

Shares issued transaction costShares issued

23 October 2012

51



2013 2012$'000 $'000

- 45 521 521

- - 521 566

Total$'000 $'000 $'000

47 521 568 (2) - (2)

- - - 45 521 566 (45) - (45)

- - - - 521 521

Note 24. Equity - reserves

The capital risk management policy remains unchanged from the 30 June 2012 Annual Report.

Foreign currency reserve


In order to maintain or adjust the capital structure, the consolidated entity may adjust the amount of dividends paid toshareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

Balance at 1 July 2011Consolidated

Capital risk management

Share-based payments reserve


currency

The consolidated entity's objectives when managing capital are to safeguard its ability to continue as a going concern,so that it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capitalstructure to reduce the cost of capital.

The consolidated entity would look to raise capital when an opportunity to invest in a business or company was seenas value adding relative to the current parent entity's share price at the time of the investment. The consolidated entityis not actively pursuing additional investments in the short term as it continues to integrate and grow its existingbusinesses in order to maximise synergies.

Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company inproportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par valueand the company does not have a limited amount of authorised capital.

Note 23. Equity - issued capital (continued)

Ordinary shares

Share buy-back

paymentsShare-basedForeign

There is no current on-market share buy-back.

Consolidated



On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a polleach share shall have one vote.

52



2013 2012$'000 $'000

- - (5,349) (5,176)(571) (173)

- - (5,920) (5,349)

2013 2012$'000 $'000

320 320

●

●

● franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date

Risk management is carried out by senior finance executives ('finance') under policies approved by the Board ofDirectors ('the Board'). These policies include identification and analysis of the risk exposure of the consolidated entityand appropriate procedures, controls and risk limits. Finance identifies, evaluates and hedges financial risks withinthe consolidated entity's operating units. Finance reports to the Board on a monthly basis.

Foreign currency reserveThe reserve is used to recognise exchange differences arising from translation of the financial statements of foreignoperations to Australian dollars. It is also used to recognise gains and losses on hedges of the net investments inforeign operations.

Note 25. Equity - accumulated losses


Share-based payments reserve

Accumulated losses at the end of the financial year

Note 26. Equity - dividends

The reserve is used to recognise the value of equity benefits provided to employees and directors as part of theirremuneration, and other parties as part of their compensation for services.

Franking credits

Consolidated

Note 27. Financial instruments

There were no dividends paid, recommended or declared during the current or previous financial year.

franking credits that will arise from the payment of the amount of the provision for income tax at the reporting date

The consolidated entity’s activities expose it to a variety of financial risks: market risk (including foreign currency riskand interest rate risk), credit risk and liquidity risk. The consolidated entity’s overall risk management programfocuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financialperformance of the consolidated entity. The consolidated entity uses different methods to measure different types ofrisk to which it is exposed. These methods include sensitivity analysis in the case of interest rate, foreign exchangeand other price risks, ageing analysis for credit risk and beta analysis in respect of investment portfolios to determinemarket risk.

Franking credits available for subsequent financial years based on a tax rate of 30%

Consolidated

The above amounts represent the balance of the franking account as at the end of the financial year, adjusted for:

Note 24. Equity - reserves (continued)

Dividends

franking debits that will arise from the payment of dividends recognised as a liability at the reporting date

Accumulated losses at the beginning of the financial year

Financial risk management objectives

53



2013 2012 2013 2012$'000 $'000 $'000 $'000

- - 4 5 15 59 - - - - 3 9 - - 2,788 2,759

15 59 2,795 2,773

New Zealand dollars

The consolidated entity undertakes certain transactions denominated in foreign currency and are exposed to foreigncurrency risk through foreign exchange rate fluctuations.

Note 27. Financial instruments (continued)

Market risk

Swiss Francs

Liabilities

The consolidated entity had net liabilities denominated in foreign currencies of $2,780,000 (assets $15,000 lessliabilities $2,795,000) as at 30 June 2013 (2012: net liabilities of $2,714,000 (assets $59,000 less liabilities$2,773,000)). Based on this exposure, had the Australian Dollar weakened/strengthened by 10% (2012: weakened /strengthened by 10%) against these foreign currencies with all other variables held constant, the consolidated entity’sloss before tax for the year would have been $278,000 higher / lower (2012: $271,000 higher / lower) and equitywould have been $278,000 higher / lower (2012: $271,000 higher / lower). The percentage change is the expectedoverall volatility of the significant currencies, which is based on management’s assessment of reasonable possiblefluctuations taking into consideration movements over the last 6 months each year and the spot rate at each reportingdate. The actual foreign exchange gain for the year ended 30 June 2013 was $76,000 (2012: $32,000).

The consolidated entity is not exposed to any significant price risk.Price risk

The carrying amount of the consolidated entity's foreign currency denominated financial assets and financial liabilitiesat the reporting date was as follows:

EurosConsolidated

US Dollars

Assets

Interest rate risk

For the consolidated entity the bank and other loans outstanding, totalling $1,561,000 (2012: $1,935,000), areprincipal and interest payment loans. The minimum principal repayments of $1,008,000 (2012: $401,000) are dueduring the year ending 30 June 2014 (2012: 30 June 2013) for these loans.

The consolidated entity’s main interest rate risk arises from long-term borrowings. Borrowings issued at variable ratesexpose the consolidated entity to interest rate risk. Borrowings issued at fixed rates expose the consolidated entity tofair value interest rate risk.

The consolidated entity is not exposed to any significant interest rate risk.

Foreign exchange risk arises from future commercial transactions and recognised financial assets and financialliabilities denominated in a currency that is not the entity’s functional currency. The risk is measured using sensitivityanalysis and cash flow forecasting.

Foreign currency risk

54



2013 2012$'000 $'000

- 316 15 15

- - 15 331

Weighted average

interest rate1 year or

lessBetween 1 and 2 years

Between 2 and 5 years Over 5 years

Remaining contractual maturities

% $'000 $'000 $'000 $'000 $'000

- 3,100 - - - 3,100 - 346 - - - 346

15.00 655 - - - 655 8.68 639 598 330 - 1,567

4,740 598 330 - 5,668

Other payables

The following tables detail the consolidated entity's remaining contractual maturity for its financial instrument liabilities.The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest dateon which the financial liabilities are required to be paid. The tables include both interest and principal cash flowsdisclosed as remaining contractual maturities and therefore these totals may differ from their carrying amount in thestatement of financial position.

Total non-derivatives

Bank overdraft

The $118,000 rent deposit (2012: $185,000) included in other receivables (Note 14).

Unused borrowing facilities at the reporting date:

Related party loan

Consolidated - 2013


Trade payables

Vigilant liquidity risk management requires the consolidated entity to maintain sufficient liquid assets (mainly cash andcash equivalents) and available borrowing facilities to be able to pay debts as and when they become due andpayable.

Non-derivatives


Financing arrangements

The consolidated entity manages liquidity risk by maintaining adequate cash reserves and available borrowingfacilities by continuously monitoring actual and forecast cash flows and matching the maturity profiles of financialassets and liabilities.

Liquidity risk

Consolidated

Credit risk


Credit risk is managed on a consolidated entity basis. Credit risk refers to the risk that a counterparty will default on itscontractual obligations resulting in financial loss to the consolidated entity. The consolidated entity has a strict code ofcredit, including obtaining agency credit information, confirming references and setting appropriate credit limits. Theconsolidated entity obtains guarantees where appropriate to mitigate credit risk. The maximum exposure to credit riskat the reporting date to recognised financial assets, is the carrying amount, net of any provisions for impairment ofthose assets, as disclosed in the statement of financial position and notes to the financial statements. Theconsolidated entity does not hold any collateral.

Finance leases

Non-interest bearing

Interest-bearing - fixed rate

55



Weighted average

interest rate1 year or

lessBetween 1 and 2 years

Between 2 and 5 years Over 5 years


% $'000 $'000 $'000 $'000 $'000

- 3,243 - - - 3,243 - 302 - - - 302

13.40 196 - - - 196

15.00 49 65 159 - 273 15.00 301 613 - - 914 8.94 509 509 586 - 1,604 9.00 48 9 - - 57

4,648 1,196 745 - 6,589

John O’Meara Peter Kazacos

Note 28. Key management personnel disclosures

The following persons were directors of Advanced Surgical Design & Manufacture Limited during the financial year:

The following persons also had the authority and responsibility for planning, directing and controlling the majoractivities of the consolidated entity, directly or indirectly, during the financial year:

Peter Welsh

Other key management personnel

Company Secretary Richard Ulrick

Directors

Chief Executive Officer and Chief Financial Officer

Executive Director and Managing Director

Non-Executive Director and Chairman Non-Executive Director

Tom Milicevic

Consolidated - 2012

Interest-bearing - variable

Interest-bearing - fixed rate

Non-interest bearing


Total non-derivatives

Bank overdraft

Finance leasesRelated party loan

Trade payables

Other loans

Non-derivatives

Other payables

The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractuallydisclosed above.

Fair value of financial instrumentsUnless otherwise stated, the carrying amounts of financial instruments reflect their fair value. The carrying amounts oftrade receivables and trade payables are assumed to approximate their fair values due to their short-term nature. Thefair value of financial liabilities is estimated by discounting the remaining contractual maturities at the current marketinterest rate that is available for similar financial instruments.

Lease liability (Hire purchase)

56



2013 2012$ $

286,289 508,310 18,235 33,403 9,801 53,196

10,000 -

- - 324,325 594,909

Balance at Received Balance atthe start of as part of Disposals/ the end of

the year remuneration Additions other the year

715,810 - - - 715,810 300,000 - - - 300,000

7,123,132 - - - 7,123,132 197,453 - - - 197,453 71,335 300,000 - - 371,335

8,407,730 300,000 - - 8,707,730

Balance at Received Balance atthe start of as part of Disposals/ the end of

the year remuneration Additions other the year

715,810 - - - 715,810 300,000 - - - 300,000

- - 7,123,132 - 7,123,132 7,554,690 - - (7,554,690) -

197,453 - - - 197,453 68,001 - 3,334 - 71,335

8,835,954 - 7,126,466 (7,554,690) 8,407,730

***

Consolidated

Long-term benefits

Compensation

Disposals/other- represents this member no longer being a key management personnel, not necessarily physicaldisposal of their shareholding.

Note 28. Key management personnel disclosures (continued)

2012

Tom Milicevic

Peter Kazacos

Peter Welsh *John O’Meara

2013Ordinary shares


Short-term employee benefits

Tom Milicevic

The aggregate compensation made to directors and other members of key management personnel of theconsolidated entity is set out below:

Post-employment benefits

Dr Gregory James Roger **

John O’Meara Peter Kazacos

Shareholding

Richard Ulrick

Peter Welsh

The number of shares in the parent entity held during the financial year by each director and other members of keymanagement personnel of the consolidated entity, including their personally related parties, is set out below:

Richard Ulrick

Ordinary shares

Additions - represents shares held on becoming a key management personnel.

57



Balance at Expired/ Balance atthe start of forfeited/ the end of

the year Granted Exercised other the year

106,000 - - (106,000) - 200,000 - - - 200,000 306,000 - - (106,000) 200,000

Balance at Expired/ Balance atthe start of forfeited/ the end of

the year Granted Exercised other the year

106,000 - - - 106,000 254,000 - - (254,000) - 200,000 - - - 200,000 560,000 - - (254,000) 306,000

*

2013 2012$ $

108,000 120,000

15,000 21,500 85,000 90,000

- - 100,000 111,500

- - 208,000 231,500

Option holding

Note 28. Key management personnel disclosures (continued)

Tom Milicevic

Tom Milicevic

Options over ordinary shares

The number of options over ordinary shares in the parent entity held during the financial year by each director andother members of key management personnel of the consolidated entity, including their personally related parties, isset out below:

Expired/forfeited/other- represents this member no longer being a key management personnel, not necessarilyphysical disposal of their options over ordinary shares.

2012

Peter Kazacos

Options over ordinary shares2013

Dr Gregory James Roger *

Peter Kazacos

Related party transactions are set out in note 32.

Audit services - PwC

Tax consulting and advice

Consolidated

Other services - PwC

Audit or review of the financial statements

Related party transactions

Tax compliance services

Note 29. Remuneration of auditors

During the financial year the following fees were paid or payable for services provided by PwC, the auditor of thecompany:

58



2013 2012$'000 $'000

344 493 600 -

- - 944 493

639 606 928 1,328

- - 1,567 1,934 (259) (301)

- - 1,308 1,633

569 503 739 1,130

- - 1,308 1,633

Lease liability - non-current (note 21)

Within one year

Note 31. Commitments

Net commitment recognised as liabilities

Lease liability - current (note 18)

Within one year

Lease commitments - operating

Consolidated

The future minimum non-cancellable sub-lease operating lease payments expected to be received by theconsolidated entity is $Nil (2012: $13,000).

Note 30. Contingent liabilities

The consolidated entity had no contingent liabilities at 30 June 2013 and 30 June 2012.

The consolidated entity has performance guarantee totalling $118,000 at 30 June 2013 (2012: $185,000) in relation torental commitments.

Representing:

Finance lease commitments includes contracted amounts for various plant and equipment with a written down valueof $537,000 (2012: $746,000) under finance leases expiring within one to five years. Under the terms of the leases,the consolidated entity has the option to acquire the leased assets for predetermined residual values on the expiry ofthe leases.

Operating lease commitments includes contracted amounts for various offices and plant and equipment under non-cancellable operating leases expiring within one to five years with, in some cases, options to extend. The leases havevarious escalation clauses. On renewal, the terms of the leases are renegotiated.

Total commitment

Lease commitments - finance

Committed at the reporting date but not recognised as liabilities, payable:

Less: Future finance charges

Committed at the reporting date and recognised as liabilities, payable:

One to five years

One to five years

59



2013 2012$ $

82,374 64,960

3,500 9,500

108,730 75,925

2013 2012$ $

570,020 200,000

- 570,020

Current borrowings:

Fee for maintenance and support services from Anittel Group Limited (shareholder and director related entity of Peter Kazacos)

Transactions with related parties

Loan with parties related to Tom Milicevic

Payment for other expenses:

Payment for goods and services:

Key management personnel

Note 32. Related party transactions

Parent entity

Interests in subsidiaries are set out in note 34.

Advanced Surgical Design & Manufacture Limited is the parent entity.

The following transactions occurred with related parties:

Disclosures relating to key management personnel are set out in note 28 and the remuneration report in the directors'report.

There were no trade receivables from or trade payables to related parties at the current and previous reporting date.

Consolidated

Fees paid to Law Corporation (director related entity of Peter Kazacos)

Loans to/from related parties

Subsidiaries

All transactions were made on normal commercial terms and conditions and at market rates.

Receivable from and payable to related parties

The following balances are outstanding at the reporting date in relation to loans with related parties:

Terms and conditions

Non-current borrowings:

Interest paid to parties related to Tom Milicevic

Consolidated

Loan with parties related to Tom Milicevic

60



2013 2012$'000 $'000

(616) (1,033)

(616) (1,033)

2013 2012$'000 $'000

7,936 8,016

10,774 11,622

5,568 5,531

6,554 7,570

9,602 8,818 521 521

(5,903) (5,287)

4,220 4,052

●

Equity

Loss after income tax

Note 33. Parent entity information

Statement of financial position

Set out below is the supplementary information about the parent entity.

The parent entity had no contingent liabilities at 30 June 2013 and 30 June 2012.

Total assets

Parent

Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity. Dividendsreceived from subsidiaries are recognised as other income by the parent entity and its receipt may be anindicator of an impairment of the investment.

The parent entity had no capital commitments for the purchase of property, plant and equipment at 30 June 2013 and30 June 2012.

Significant accounting policies

Contingent liabilities

Issued capital

Total liabilities

Total current liabilities

Statement of profit or loss and other comprehensive income

Total current assets

Parent

The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in note 1,except for the following:

Capital commitments - Property, plant and equipment

Total equity

Share-based payments reserveAccumulated losses

Total comprehensive income

61



2013 2012% %

100.00 100.00

100.00 100.00

2013 2012$'000 $'000

- - (571) (173)

1,013 941 (45) (2)

269 (670)137 (2,729)61 (605) - 425

(26) (40)(235) 3,317 (74) (40)

- - 529 424

Increase in prepaymentsDecrease in deferred tax assets

No other matter or circumstance has arisen since 30 June 2013 that has significantly affected, or may significantlyaffect the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairsin future financial years.

Decrease/(increase) in trade and other receivables



Foreign exchange differences

Note 36. Reconciliation of loss after income tax to net cash from operating activities

Decrease/(increase) in inventories

Net cash from operating activities

Change in operating assets and liabilities:

Decrease in other provisions

Decrease/(increase) in income tax refund due

Increase/(decrease) in trade and other payables

Consolidated

Adjustments for:

An Asset Sale Agreement was entered into with Orthofix Inc on 12 July 2013, the result of which was that theconsolidated entity's existing spinal distribution business was acquired by Orthofix Inc's subsidiary Orthofix AustraliaPty Ltd (‘OA’). This transaction continues the consolidated entity's focus of strengthening the statement of financialposition and on its orthopaedic product range in delivering sales growth and profitability.

As part of the agreement, the Orthofix stock was sold to OA for approximately $2,556,000 and the consolidated entitywas able to fully settle its payable with Orthofix Inc for the amount of $2,546,000. This transaction will result in a gainof $203,000 in the financial year ending 30 June 2014.

Name of entity

ASDM Holdings Pty LimitedAdvanced Surgical Design & Manufacture (UK) Limited

Australia

United Kingdom

Country of

Note 35. Events after the reporting period

Equity holding

incorporation

Note 34. Subsidiaries

The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries inaccordance with the accounting policy described in note 1:

62



2013 2012$'000 $'000

(488) (209)

Number Number

38,418,751 35,298,996

38,418,751 35,298,996

Cents Cents

(1.27) (0.59)(1.27) (0.59)

2013 2012$'000 $'000

(83) 36

Number Number

38,418,751 35,298,996

38,418,751 35,298,996

Cents Cents

(0.22) 0.10 (0.22) 0.10


Consolidated


Weighted average number of ordinary shares used in calculating diluted earnings per share

Loss after income tax attributable to the owners of Advanced Surgical Design & Manufacture Limited

Weighted average number of ordinary shares used in calculating basic earnings per share

Consolidated


Profit/(loss) after income tax attributable to the owners of Advanced Surgical Design & Manufacture Limited

Earnings per share from discontinued operations




Earnings per share from continuing operations

Note 37. Earnings per share

63



2013 2012$'000 $'000

(571) (173)

Number Number

38,418,751 35,298,996

38,418,751 35,298,996

Cents Cents

(1.49) (0.49)(1.49) (0.49)

Balance at Expired/ Balance atExercise the start of forfeited/ the end of

price the year Granted Exercised other the year

$0.50 206,000 - - (206,000) - $0.60 200,000 - - - 200,000 $0.60 8,000 - - (8,000) -

414,000 - - (214,000) 200,000

16/11/07 16/11/13 *


Options granted to employees under the Employee Option Plan for year ended 30 June 2013 and prior years are notincluded in the determination of diluted earnings per share because they are anti-dilutive for the year. These optionscould potentially dilute basic earnings per share in the future. The options have not been included in the determinationof basic earnings per share.

01/07/07 05/12/12

Options under the Option Plan are granted for no consideration. Any options granted do not give any right toparticipate in dividends or rights issues until shares are allotted pursuant to the exercise of the relevant option.Options granted under the Plan are not transferable.

Earnings per share for lossLoss after income tax attributable to the owners of Advanced Surgical Design & Manufacture Limited

Consolidated

Note 37. Earnings per share (continued)

Grant date Expiry date

The consolidated entity has an Employee Share Option Plan ('Option Plan') which was approved by shareholders atan Extraordinary General Meeting held in May 2006. Key management personnel’s long-term incentives can be wayof participation in the Option Plan. This long term incentive program aligns the interests of key managementpersonnel more closely with those of company's shareholders and rewards sustained superior performance.

Note 38. Share-based payments


2013


26/03/10 30/06/13 *

Set out below are summaries of options granted under the plan:

The objective of the Option Plan is to assist in the recruitment, reward, retention and motivation of employees of theconsolidated entity while advancing the interests of the company by affording such persons the opportunity ofbenefiting from increases in shareholder value, thereby more closely aligning their interests with those ofshareholders.

There were no options issued during the year.


64



Balance at Expired/ Balance atExercise the start of forfeited/ the end of

price the year Granted Exercised other the year

$0.50 254,000 - - (254,000) - $0.50 206,000 - - - 206,000 $0.60 200,000 - - - 200,000 $0.60 20,000 - - (12,000) 8,000

680,000 - - (266,000) 414,000

01/07/07 30/06/12 *01/07/07 05/12/12 *

Grant date Expiry date

Note 38. Share-based payments (continued)

* At the reporting date 200,000 (2012: 406,000) options were fully vested.

The weighted average remaining contractual life of share options outstanding at the end of the period was 0.38 years(2012: 1.57 years).

2012

26/03/10 30/06/1316/11/07 16/11/13 *

65

●

●

●

●

Directors' declarationAdvanced Surgical Design & Manufacture Limited

there are reasonable grounds to believe that the company will be able to pay its debts as and when theybecome due and payable.

In the directors' opinion:

the attached financial statements and notes thereto comply with the Corporations Act 2001, the AccountingStandards, the Corporations Regulations 2001 and other mandatory professional reporting requirements;

the attached financial statements and notes thereto give a true and fair view of the consolidated entity'sfinancial position as at 30 June 2013 and of its performance for the financial year ended on that date; and

the attached financial statements and notes thereto comply with International Financial Reporting Standardsas issued by the International Accounting Standards Board as described in note 1 to the financialstatements;

Sydney

30 August 2013

Peter KazacosDirector

________________________________

The directors have been given the declarations required by section 295A of the Corporations Act 2001. Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001. On behalf of the directors

66

Vik

Stamp

67

68

Numberof holdersof ordinary

shares

11 145 87

107 33

383

180

% of totalshares

Number held issued

7,781,939 17.79 7,067,856 16.15 6,600,000 15.09 5,636,285 12.88 2,332,857 5.33 1,000,000 2.29 1,000,000 2.29

892,857 2.04

580,204 1.33 572,000 1.31 473,685 1.08 403,334 0.92 355,000 0.81 353,000 0.81 309,358 0.71 303,334 0.69 300,000 0.69 300,000 0.69 286,000 0.65 286,000 0.65

36,833,709 84.20

TOM MILICEVIC

WELSH SUPERANNUATION PTY LIMITED MARIE CAROLL & DAWSON CAROLL MERGIN INVESTMENTS PTY LTD <M&V CROSS SUPER FUND A/C>

CRYPTYCH PTY LTD <CRYPTYCH SUPER FUND>

5,001 to 10,000 1,001 to 5,000 1 to 1,000

SIMON ROBERTS

LESLIE HARRY CROSS JOHN O'MEARA & MARGARET O'MEARA

PETER WELSH MS NICOLE FAITH ROGER

CRYPTYCH PTY LTD


Distribution of equitable securities

30 June 2013

The shareholder information set out below was applicable as at 22 August 2013.

Shareholder information

Analysis of number of equitable security holders by size of holding:

Twenty largest quoted equity security holders

Ordinary shares

Equity security holders

100,001 and over 10,001 to 100,000

The names of the twenty largest security holders of quoted equity securities are listed below:

Holding less than a marketable parcel

ROBINWOOD INVESTMENTS PTY LTD

GEGM INVESTMENTS PTY LTD

MR THOMAS JAMES CARROLLMR KENNETH CAMPBELL MISTY HILLS NOMINEES PTY LTD MR ANTHONY GEOFFREY HARTNELL & MRS MARYED HARTNELL <HARTNELL RETIREMENT FUND A/C>

ASGARD CAPITAL MANAGEMENT LTD <1052744 WOOD SUPER FUND A/C>DESMOND J BOKOR PTY LIMITED

DESTIN PTY LIMITED

69


30 June 2013Shareholder information

Number Numberon issue of holders

200,000 1

% of totalshares

Number held issued

8,747,424 19.99 7,946,190 18.16 7,073,285 16.17 5,636,285 12.88 2,332,857 5.33

There are no other classes of equity securities.

Voting rightsThe voting rights attached to ordinary shares are set out below:

Options issued to Tom Milicevic under the Company’s Employee Share Option Plan, exercisable at 60 cents and expiring 16 November 2013

Marie Caroll & Dawson CarollMergin Investments Pty Ltd

Peter Welsh and Welsh Superannuation Pty Limited

Substantial holdersSubstantial holders in the company are set out below:

Unquoted equity securities

Ordinary shares

Ordinary shares

Robinwood Investments Pty LtdCryptych Pty Ltd and Gregory James Roger

Advanced Surgical Design & Manufacture Limited has not undertaken an on-market buy-back during the last financialyear.

Enquiries about your shareholdingPlease contact Link Market Services Limited, the Company’s share registry, for all questions in relation to yourshareholding, dividends, share transfers and monthly holding statements. The linkhttp://www.linkmarketservices.com.au/corporate/InvestorServices/FAQ-Guide.html provides answers to somefrequently asked questions by shareholders. Shareholders are able to download some common forms (includingchange of address) from the same link. See Directory in this report for other contact details.

Options

On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a polleach share shall have one vote.

Shareholder communicationsThe Company publishes information for its shareholders in the annual report, quarterly newsletters and via releases to the ASX. Investor Information can be found on our website: www.asdm.com.au

No voting rights.

Share buy-back

70

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